4 Key Elements Of Estate Planning
It's Critical To Have A Plan So Your Financial Goals Are Met After You're Gone
The topic of estate planning is one that most people don’t want to talk- or think- about. Most of us don’t want to consider what is going to happen after we die, but it is critical to do so. Putting a plan in place will ensure that your family and financial goals are taken care of once that day comes. You want to be sure that the people left behind know your wishes.
There are four main elements of estate planning, which include drawing up a will, a living will and healthcare power of attorney, a financial power of attorney, and in some cases, a trust.
A will outline your wishes for the assets that you own at your passing. It allows you to name the people to whom you wish you give these assets, and without one, your assets will immediately go to your first family member. Having a will in place will give you peace of mind knowing that your assets (including electronic) are going to whom you want them to and knowing that your financial affairs are in order. It will also mitigate the risk of an administrative mess for those left behind. Be sure to discuss your plans with your heirs and to alleviate any issues or disagreements sooner than later.
It is best to draw up your will when you get married, but once you have a child it is a must. Where you get your will has a lot to do with your particular situation. If you are single. online resources such as LegalZoom or www.quickenwillmaker.com can be suitable. Once life becomes a little more complicated and there is a spouse, children, small business, or any other complexities involved, it is usually a good idea to speak to an estate attorney.
Healthcare Power of Attorney and Living Will
A Healthcare Power of Attorney (HPOA) is a signed legal document in which you name a single person as your healthcare decision maker in the event that you can’t make decisions yourself. A living will, also known as an advanced medical directive, outlines your wishes regarding medical care in the event that you are incapacitated, terminally ill, or unable to communicate. This is a statement of your wishes as they relate to decisions about life support and any kind of life-sustaining medical intervention that you want or don’t want.
It is generally best to get these documents drawn up the same time as your will. Or, if you have any discomfort in having your parents or spouse make all medical decisions for you, it’s best to have it done immediately. Online, LegalZoom is suitable for a basic document. If you have specific requirements that require detailed documentation, seeing an estate attorney is more suitable.
Financial Power of Attorney
Similar to the Healthcare Power of Attorney, a Financial Power of Attorney outlines who you want to make your financial decisions on your behalf should you become incapacitated. Without this document, no one will have the authority to step in and handle bill-paying, investment decisions, and other financial matters. You don’t want these things left up to the courts, therefore it’s imperative to give that authority to the person that you select.
Like the Healthcare Power of Attorney, it’ best to get this document at the same time as your will. Or, if you have any discomfort in having your parents or spouse make all financial decisions for you, immediately. Online is suitable for a basic document, but if you have specific requirements that require detailed documentation, it’s best to see an estate attorney.
A trust is a legal entity that can own your assets (while living or at death) and be controlled based on your wishes outlined in the legal document that created the entity. For example, a trust would allow you to dictate how you wanted your child to benefit from your assets throughout his or her life. You may want to stipulate that they are used in a certain way or received at a certain time. A trust is a way to protect assets from being used in a way that you would not see fit if you were in control of them.
There are several advantages to having a trust, however, it is not necessary unless you are worried about the oversight or care of your assets at your passing. Ultimately, you are trusting your heirs to manage and use your assets properly should you pass away. If you have a sizeable insurance policy or estate and/or children, a trust is worth discussing with an attorney to determine the right parameters and language for your situation.
Is your estate planning in order? If not, consider getting these important documents in place as soon as possible. You want to ensure that your financial goals are carried out in the manner that you would like, and by whom you would like, when you're gone.
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Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.