Estate planning rarely gets the attention it should get.
Are you saving for your children’s education, purchasing a second home, or thinking about when and how to retire? These are all topics that people talk about with their friends and their financial advisers but deciding what happens to your remaining assets when you die is often passed over. It shouldn’t be, because it is crucial to building a successful financial plan.
Not discussing something that is going to happen will not stop it from happening. At some point, someone is going to have to sort out your estate, regardless of how big or small it is. Here are some of the key issues that you should consider:
Everybody should have a Will. People who are married and/or have dependent children are inexcusably foolish if they do not. There are significant issues that only a will can clarify. One of the biggest is who will take care of the people you love, and how? You may have told your best friend that he will be the guardian of your children if you and your spouse die in a plane crash, but unless you spelled out your wish in a will, there is no guarantee this will happen. If both parents die, it will be up to the state to decide.
For example, which parents would you want to raise your children, yours or your spouse’s? Or if the state determines the child(ren) go to one of your siblings, do you care which one?
If you’ve ever wondered what will happen to your money if you die without a Will, go to mystatewill.com. It will show what happens to your assets in each state if you die without a Will.
Everyone should have a Living Will and Medical Directive. Once you have figured out your Will(s), you need to think about what will happen if you are seriously injured or incapacitated. This is the territory of Living Wills an area where you really want to pay attention to the details. Living Wills and other Advance Directives are written, legal instructions regarding your preferences for medical care if you are unable to make decisions for yourself. Advance Directives guide choices for doctors and caregivers if you’re terminally ill, seriously injured, in a coma, in the late stages of dementia or near the end of life.
By planning, you can get the medical care you want, avoid unnecessary suffering and relieve caregivers of decision-making burdens during moments of crisis or grief. You also help reduce confusion or disagreement about the choices you would want people to make on your behalf.
Some may need a Special Needs Trust. People with physically or mentally challenged children worry about how their deaths will affect their children. Special-Needs Trusts are a common and effective way for parents to make sure their children are cared for. By leaving money to a Trust and not to their special-needs children, parents can supplement government benefits to their children.
Setting up such a Trust is not difficult, but it requires advance thought. The issues involved range from how you will finance the Trust (cash, securities, or insurance policy), to who you will designate as the trustee. That person will not only make decisions involving how the money will be spent, but, more crucially, the trustee will evaluate the care the special-needs child is receiving. You can read more about Special Needs Trust HERE.
Everyone should consider a Trust and review it every five years. Keep in mind there are many different types of Trusts, but if you own a home, have any sort of investments, a retirement savings, children or grandchildren, or a spouse – you should consider a Trust. Read more about Why you Should Consider a Trust HERE.
Regardless of what the Trust(s) were for or when they were written, they should be reviewed at least every five years, or when any changes occur (divorce, etc.). State laws change, situations change, and people change.
Basically, if you are reaching retirement, estate planning, or putting a plan in place in case of long-term care, there are six important documents Everyone Should Have:
Durable Power of Attorney
Durable Health Power of Attorney
Health Care Directive “living will”
Community Property Agreement (if you’re married)
HIPPA form if you are single or widowed
It’s time, stop waiting, you need to start planning!