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Time to Stop Putting Off Estate Planning
top of our understandable aversion to facing our own mortality, estate
planning conjures up images of mind-boggling detail, long hours with
an attorney and high cost. But for most people, creating a basic
estate plan can be pretty simple in terms of paperwork. The hard
part comes in forcing ourselves to do the upfront thinking and get
On the bright side, this thinking and organization is something we all should
do periodically anyway. Plus, an estate plan isn’t only about money; it’s
about protecting your kids and each other. So it really is worth the time and
a bit of effort.
Start with your financial situation
Many people think an estate plan is only for the wealthy. But just because you’re
not worth millions doesn’t mean you shouldn’t protect what you have.
Now is a good time for you and your husband to take financial inventory. Add
up what you own, such as a home, business, bank accounts, investment and retirement
accounts and life insurance.
Now subtract what you owe to get an idea of your net worth. You might be surprised
at the value of what you have — and therefore motivated to make sure it
passes properly to your heirs. Even if it’s simply to each other and your
kids, why not make it easier on yourselves and your children if the unexpected
Agree on the personal decisions
How you distribute your assets is only one part of estate planning. Equally,
if not more important, is designating a guardian for your children. If you don’t,
the state will. You also should think about your preferences for health care
if you become incapacitated, and appoint someone to communicate your wishes.
Plus, you’ll need someone to make financial decisions.
It’s a good idea to contact the people you have in mind. All of these positions
involve a lot of responsibility. Make sure the people you choose are willing
and able to handle it.
Prepare three basic documents
Once you know what you want to do, the paperwork can be fairly easy. I always
advise consulting with an estate-planning attorney, but if your finances are
straightforward, your estate plan will likely be as well. You’ll need:
• A will — This states how your assets should be distributed when
you die. It’s also the place to designate the guardian for your children.
You should name an executor who will be responsible for settling your estate.
This can be a family member, friend or attorney. Whoever you choose should be
someone you trust to be fair and responsible in carrying out the duties.
• A durable power of attorney for finances — Also known as a financial
power of attorney, this gives someone the authority to make financial decisions
on your behalf should you become incapacitated.
• An advance health care directive with medical power of attorney —This
designates an individual to make medical decisions for you in the event that
you’re unable to do so. It also spells out the type of care or life-sustaining
measures you want — or don’t want.
To be valid, you must sign your will and also have it witnessed and signed by
two other people. The powers of attorney must be notarized.
If you have IRAs, 401(k)s and life insurance, check that you’ve designated
your beneficiaries properly. These assets pass directly to your heirs without
going through probate. It’s common to name your spouse as primary beneficiary
and your children as secondary beneficiaries.
Consider a trust
A revocable living trust is another option. Its main value is to avoid probate,
which can be a long, costly — and public — process. While a living
trust takes a bit more time and costs more to establish, it keeps your estate
private and makes it easier to settle. It can also reduce taxes for wealthy individuals.
Depending on your circumstances, you might want to talk to an estate-planning
attorney about what it takes to set up a trust.
Keep documents accessible
Consider keeping your documents in a safe place in your home, along with property
deeds, insurance policies, a list of your accounts, and contact information for
your attorney or advisors. A safe deposit box isn’t the best place because
it could take a court order for someone to access it if it’s in your name
only. You can also have your attorney keep copies.
Creating a basic estate plan may help you focus on the rest of your finances
and become more organized. So think of it less as a chore and more as an opportunity
to put your financial house in order. And, please, do it now-for yourselves and
for your children.
The information herein is not intended as Legal advice. Where such advice is
necessary and appropriate, please consult a qualified attorney.
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