Estate Planning: Not Just for the Elderly
In today’s world, estate planning is not just for the elderly. You need to be prepared for any future scenario. While it might seem like a bother and inconvenience now, from my experience, I cannot stress enough the importance of preparing an estate plan and the time, money and stress it will save your loved ones. More young families are preparing for their children’s and families’ future should something happen to them so that they have access to uninterrupted financial stability. No matter your net worth, it is important to have a basic estate plan in place.
Estate planning is more than just having a will; organizing your assets and health care wishes now can help avoid family conflicts and in many cases, can prevent a large portion of your assets from going to the government later. This planning can save your family unnecessary expenses, hassle, and delays. We can all agree that you would probably rather see your assets go to your loved ones rather than to courts and attorneys.
Here are 6 key items to should review or prepare in an estate plan:
Records: Compile a list in one master folder of all your financial and personal information that is needed for death. Some of these documents include a copy of your birth certificate, you will, bank account information, as well as legal and accounting contracts. Anything that can serve as a roadmap should be kept in one master electronic file (and a physical file), with attachments. You can find an estate organizer to begin the process on our web site under ‘Trusts & Estates.’ Keep this file in a safe place and make sure someone knows where it is. A safety deposit box is not a good place to keep these papers, since it is hard to access the box when needed.
Will: Have an up to date will, and review it annually to make sure it reflects your current wishes. The dynamics of family, friends and your financial situation changes. Be very specific as to what you would like someone to inherit. Financial values of the item should not be a factor in this area.
Durable Power of Attorney: A Durable Power of Attorney is a legal document in which you name another person to act on your behalf in case you become incapacitated or seriously injured. This power can be given broad or limited management powers. It provides a financial management safety net for your loved ones since it insures uninterrupted financial management powers. A durable power of attorney terminates upon your death.
Health Care Power of Attorney: A Health Care Power of Attorney authorizes someone to make medical decisions for you in the event you are unable to do so yourself. This legal document, working together with a living will, can prove to be invaluable for avoiding family conflict that could end up with court intervention.
Living Will: A Living Will expresses your personal wants in reference to life sustaining measures in the event of terminal illnesses (e.g. having to go on life support.) It does not give anyone the authority to speak for you. In some states, this document may be combined with a health care power of attorney.
Trusts: There are many different types of trusts with different purposes, each accomplishing a variety of goals. Your personal situation will determine if a trust is suggested. If it is advantageous, the type of trust needed has to be determined. Need and financial value of your estate could be independent of one another in determining if a trust is advisable. We will go into the different types of trust in future articles.
The need for estate planning starts with good organization of your financial matters and continuing with having the correct legal documents in place. I cannot stress enough the importance of having an estate plan for you and old alike.