Estate Planning 101
Basic estate planning is something that everyone should do, regardless of your age, marital status, and if you’re a parent or not. In the US, the statistic is staggering that only 40% have a will or have an estate plan. Of those that are older Americans, 81% of those age 72 and older, and 58% of ‘Boomers’ have estate planning documents in place. However, many in this age group have not planned how to leave their estate, which is a common trend in our country.
Estate planning should include the following elements, and a formal estate plan should be drafted by an attorney qualified in this area:
A Will- A will determines where assets will go that don’t have a beneficiary listed. Common items listed should include your home (if paid off), cars, collections, even household items. Bank Accounts and even brokerage accounts with no beneficiary listed would be included in your will and estate plan, with the terminology appropriate to these types of assets.
An ‘Executor’ of Your Estate- Commonly this is a relative or friend, but in more complex cases where there are substantial assets, a professional manager may need to be considered.
A Guardian’ for your Minor Children- If you have a young family, your estate plan should include who you would like to care for your children if both parents are deceased. Without this directive, the state of your residence decides, and your children may be otherwise be placed with someone you wouldn’t prefer. In cases of a child with special needs, consideration should be addressed and planned for care of the child now, and after age 18 throughout their adulthood.
Medical Power of Attorney- Commonly, spouses list each other as medical power of attorney, but you have the full authority to list anyone you choose. A Medical Power of Attorney makes medical decisions for you when you’re incapacitated to do so for yourself.
Financial Power of Attorney- This individual, or individuals have the authority to pay your bills, and manage your finances for you, if you are unable to yourself. This is important because if you require extended medical or nursing care, they pay the bills so you’re able to remain in that facility. Without planning and having a Financial Power of Attorney named, your assets are seized and liquidated by the state, even if you have the assets to pay.
A Trust Document- Living Trusts allow you to pass assets without going through probate, and allows someone else to handle your financial affairs if you’re unable to. A trust document names the ‘trustees’, or who the trust benefits, as well as a successor trustee who will take over when the trustees are unable to manage their own affairs or pass away. This is a key element in estate planning.
Although these elements are the main parts of an estate plan, they may not be all you need depending on your personal situation. When working with an attorney, tax planning professional, and financial advisor, include all of them in your estate planning process. This will ensure that your plans are carried out the way that is best for you and how you intended. If you have any questions regarding getting started on an estate plan, feel free to contact our office to set up a meeting regarding prepping financial documents or obtain referrals for attorneys specializing in estate planning in our area.