Estate planning is a very important part of life. However, it doesn’t have to be overwhelming. Having a plan in place helps you to manage those inevitable uncertainties and control what you can. Here is an explanation of the primary documents associated with this process.
Will – This is your primary estate planning document which allows you to detail how you would like your property and assets distributed after you die. You will name an executor who will be in charge of managing the distribution of your assets. If you have minor children or a child with special needs, you will appoint a guardian who will be in charge of raising your children. Keep in mind your will is subject to public record. If you don’t leave a will then the state will control the distribution of your assets.
Revocable Living Trust – This is an additional option to your will to indicate how your assets will be distributed. You will appoint a trustee who will oversee this process. Having this trust allows you to avoid probate which is the process through which a court determines that a will is legally valid. The benefits of this trust include more confidentiality, less costs and a faster settlement of your estate. All real estate should be transferred to the trust including savings accounts, mutual funds and other investments.
Financial Power of Attorney – Allows you to appoint an agent (usually a family member, friend or adviser) to act on your behalf with respect to your financial matters. You can grant this person a specific power (related to a specific financial transaction) or complete control over all financial matters (or anything in between).
Health Care Directive and Living Will – The purpose of this document is to appoint someone (usually a family member or trusted friend) to make health care decisions on your behalf in the event that you are not capable, and to make your end-of-life wishes known.This person is called your health care agent (also called your health care proxy or health care power of attorney).
HIPAA Release – This document gives doctors and hospitals the permission to share your medical information and records with specific people you name (your children, siblings, etc.) in addition to your health care agent. This is something that all individuals should have on hand in case of emergencies (especially for your parents).
Lastly, does your family know where to find everything you’ve prepared? Create a list of documents and accounts (financial or otherwise) and where they can be found (including appropriate contact information where needed).
You should always consult with an estate planning attorney to make sure you have the correct documents in place. Be sure to review your estate plan at least every 5 years or more often, if there are changes to tax laws, your finances or your personal situation. It is much easier to have these in place sooner rather than later to avoid any issues due to lack of planning.
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