Do you have an exit strategy?
It’s no surprise that every financial planner suggests that clients have appropriate estate planning documents in place.
But folks are often surprised that the suggestion applies to them.
Many people don’t think they have sufficient assets to justify an “estate” plan. Some already have a will, never mind that it’s older than some of their (grown) children. Others understand the need, but they just haven’t gotten around to putting anything into place.
The truth is that every person, regardless of circumstances, needs an estate plan. Have children? You need one. Don’t have children? You need one, too.
Lots of cash? Lots of debt? Healthy? Disabled?
Need one. Need one. Need one. Need one.
Everyone, regardless of circumstances, needs an estate plan that is reviewed regularly to take into account significant life events and changes in laws and regulations.
Keep in mind that “estate plan” doesn’t refer only to a Will. A complete Estate Plan is made up of a variety of documents. The appropriate documents for your plan are based on your long-term goals and wishes for your family.
However, there are a few documents that are common to most estate plans. Almost all solid estate plans include:
- A Will and/or Trust,
- A Durable Power of Attorney,
- Advanced Health Care directives, and
- HIPAA designations.
These documents will help your loved ones understand your requests and make the distribution process easier for them during an already difficult time.
Will/Trust
Your Will and/or Trust document forms the foundation of your estate plan.
It will determine how the property you own or control is distributed at your death. Without a Will and/or Trust in place, your assets transfer based on the intestacy laws in your state. This means your heirs don’t decide what happens to your property, the state does.
This document also allows you to name an executor to handle the distribution of assets and may include guardianship instructions for your children or yourself.
Durable Power of Attorney
If you are incapacitated for any length of time, the bills still need to be paid and decisions about your finances will need to be made.
A Durable Power of Attorney allows you to choose someone you trust, in advance, to act on your behalf for legal and financial matters should you become physically or mentally incapable of managing your own affairs.
Advanced Health Care directives
Should your health deteriorate so that you are unable to make decisions for yourself, someone needs to make decisions for you regarding your health care as well.
These documents allow you to communicate your wishes about medical treatment if you are unable to do so at some time in the future. They also allow you to designate a person to make medical decisions for you in cases where it isn’t clear what you would want.
These documents can include a Living Will, Medical Power of Attorney or DNR (Do Not Resuscitate order). Having these documents in place removes a heavy burden from those who love you, allowing them the peace of knowing that they are honoring your wishes.
HIPAA designations
This designation allows the individuals you list to access important medical history and information on your behalf.
Medical professionals must have these designations in place before releasing any of your medical information. Should you encounter a health crisis, ready access to your medical records is critical for your caregivers. These designations clear the path for your designee to access necessary information to assist with your medical treatment decisions.
Estate Plans are Part of the Overall Financial Plan
This isn’t a comprehensive list of everything you may need in your Estate Planning Documents. You may need to incorporate other documents that are tailored to your specific circumstances.
Since we are not attorneys, we always suggest clients meet with an attorney who specializes in Estate Planning to ensure the appropriate documents are drafted and executed correctly. She will also help you make sure that your account titles and beneficiary designations coordinate with your overall estate plan to eliminate any confusion down the road.
An estate plan is a key piece of the financial planning puzzle, and we all need one, regardless of our circumstances.
Would you like to talk more about your financial plan? I can help you with that. We are CERTIFIED FINANCIAL PLANNER™ professionals serving Allen, McKinney, Plano and the surrounding areas in North Texas. Just fill out the contact form below and we’ll be in touch.
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