When people hear the term “estate planning,” they often think it’s only a process that wealthy people need to go through. But estate planning goes beyond just dividing up your assets. An estate plan is a detailed map that outlines how you want your affairs to be handled in the event of your incapacity or death.
Everyone, regardless of age, health, or wealth, needs some form of estate planning. This is especially true under certain circumstances. For example, if you have children, you probably have strong wishes on who should or should not take care of your children in the event something tragic happens to both you and your spouse. Naming a guardian is very important.
A simple aspect of estate planning is updating your beneficiaries on your financial accounts. We recommend an annual audit of your beneficiaries to ensure the people you have listed to inherit your accounts or life insurance are who you still want to do so. Things change; people marry, people divorce, and people pass away; so, it’s important to review your beneficiaries and keep them updated.
For more in-depth estate planning, we recommend clients discuss their situations with their attorney to determine what documents are needed. Here are several estate planning documents that many people should consider drafting:
- Durable Power of Attorney. In the event you become incapacitated, this document gives your authorization for someone else to act on your behalf on financial matters.
- Durable Power of Attorney for Health Care. This legal document allows you to appoint a person to make medical decisions on your behalf when you are not able to do so.
- Living Will. This document provides guidance for medical personnel on when to suspend medical treatment. This advanced medical directive is often used for patients that are terminally ill or at end-of-life stages and unable to communicate themselves.
- Will. This legal document is used to disburse your property after your death, according to your wishes. If there is no will in place, state statues will determine who is to receive your property.
- Letter of Instruction. This is an informal, non-legal document that often accompanies a will. It is used to express your personal thoughts, such as where documents are located, passwords, and burial wishes.
- Revocable Living Trust. A revocable living trust is separate legal entity that owns property during your lifetime. However, it must be funded, meaning, you must retitle property in the name of your trust or designate the trust as a beneficiary on certain accounts. Upon your death, it becomes irrevocable. An advantage to using a trust is that the property held within the trust avoids probate.
At Hovis & Associates, we remind our clients of the importance of having an estate plan. While we are not attorneys, we do work with several attorneys that we would be happy to recommend. We can help from a financial perspective with reviewing beneficiaries, hosting family meetings to communicate your wishes, or utilizing our electronic vault to gather all your important documents. When you are ready, call us to schedule a meeting.