Estate Planning

It’s Never Too Early or Late to Get Started

Whether you're young and just beginning to accumulate assets, or older and looking to ensure your legacy, an estate plan provides valuable peace of mind no matter your net worth or income level.

Many people make the mistake of thinking that estate planning is just a way for the uber-wealthy to divvy up their sizeable assets., but the reality is everyone can benefit from one. Here’s why:

In legal terms, an estate consists of your assets. This includes your home, furniture, car, ATV, boats, investments, insurance, possessions, and any financial assets you may have.

An estate plan works to outline what you want to have happen to those assets when you die or if you’re unable to make decisions for yourself. Having an estate plan in place works to eliminate questions and confusion about what should happen and minimize income, gift and estate taxes, all of which lessens stress at a difficult time. 

Without an estate plan, your assets can wind up in legal limbo for years, potentially creating a lot of work, headaches, and expense for those who are left to sort it out. If you have minor children and no estate plan, the courts will decide who gets custody of your children.   

While the term estate plan implies a single document, it can encompass many different documents including:

    ►  Letter of intent

    ►  Living will or trust

    ►  Durable power of attorney  

    ►  Medical power of attorney

    ►  Advance directives

    ►  Guardianship designations

Here’s the purpose of each of those documents.

Letter of intent: a letter of instruction that clearly outlines and expresses your final wishes, including the estate plan should be carried out, where to find important documents, and general guidance for loved ones.

Will or living trust: While both wills and living trusts serve as tools for outline the distribution of your assets, they differ in some key was.

A will is a legal document that details your assets and how you’d like them handled after your death. It also clearly names a beneficiary, or beneficiaries, to receive your assets and a trustee who’ll be responsible for distributing them.

A living trust, on the other hand, is a trust fund where your assets are held until a predetermined time. Those assets can be distributed upon your passing or another date of your choosing such as when a child reaches a certain age, even if that occurs before your death. Like a will, a living trust clearly names a beneficiary, or beneficiaries, to receive your assets and a trustee who’ll be responsible for distributing them.

Durable power of attorney: This document designates and authorizes someone else to make financial decisions on your behalf if you become incapacitated for any reason, including illness and accidents. 

Medical power of attorney: Sometimes referred to as a healthcare power of attorney, this document lets you give someone legal authority to make important decisions about your medical care. This individual fulfills the role of your healthcare agent or proxy and can make decisions about treatment options, medication, surgery, end-of-life care, and more. 

Advance directives: Also referred to as a living will, an advance directive is a written document expressly for our health care providers. It outlines who you have designated as your health care agent or proxy.

Guardianship designations: This document allows you as a parent or legal guardian to appoint a chosen individual to care for your minor children in the event of your death or incapacitation.

Obviously, there’s a lot that goes into creating an estate plan and depending upon the nature of your assets and wishes, it can be complicated.

No matter how minimal you think your assets are, it’s advisable to work with a qualified estate planning attorney to draft or update your estate planning documents. Your banker, or financial advisor or accountant if you have one, may be able to recommend one. Once you have prepared your plan, be sure to revisit it any time there’s a change in your financial circumstances or the status of loved ones and beneficiaries (i.e. marriage, divorce, birth of a child, death, etc.).

Again, having an estate plan in place will eliminate questions and confusion for family and loved ones and will can help lighten their load at a difficult time.   

DISCLAIMER: This article is meant for educational purposes only and is not intended to be construed as financial, tax, investment or legal advice.