Having an estate plan is critical. So, why do we put it off so much?!
I don’t really know.. Maybe because it’s morbid? Well, whatever the reason, can we just suck it up for the sake of our family??
Here’s what you need to know about estate planning basics…
Documents You Need In Your Estate Plan
An estate plan includes several different documents, such as a will, trust, health care directives, power of attorneys, and beneficiary designations. It will depend on your specific situation which you need. You may or may not need all of these or just a few.
In a will, you state exactly who will inherit all of your property, and you name a guardian to care for your children if something happens to you. Generally, everyone needs a will. If you die without a will (intestate), your heirs will have to go through probate court and it may be very expensive for them. Even if you have a trust, you still need a will because it will address any items outside of the trust.
2. Living trust
A living trust is a trust created while you’re alive that designates one person as a trustee (you or someone else) and another person (or people) as the beneficiary of your property (money). By holding your money in a living trust, your survivors do not have to go through probate court. If you are the trustee of your trust, upon your death, your successor trustee will transfer your property to the designated beneficiaries.
3. Health care directives
A health care directive is a way for you to make health care decisions now if you become unable to. This includes a health care declaration (living will) and a medical power of attorney (giving someone the right to make decisions if you can’t). By doing this, you decide what measures you want taken if you are unable to make those decisions. This can be extremely helpful to your family and loved ones who would otherwise have to guess for you during a time of stress. A health care directive can be beneficial to everyone involved.
4. Power of attorney
There are two types of power of attorneys: springing power of attorney and durable power of attorney. By designating someone a springing power of attorney, you give them permission to take control of your affairs only after something happens (or “springs”). Usually, a springing power of attorney is used when someone becomes incapacitated (as a medical or financial power of attorney, to make decisions regarding your health and your finances if you are incapacitated). On the other hand, a durable power of attorney gives someone permission to act on your behalf now (not when something happens). (Note, the person does not have to be an actual attorney!)
5. Beneficiary designations
Beneficiary designations are included on some financial instruments (like retirement plans and insurance policies) as a direction of where the asset should go when you die. In your estate plan, you can name beneficiaries to all of your assets. It will ensure that what you own goes to the right people when you die.
What To Do Next
The five documents above will help you understand what you need for your family. But you’re not done. That’s only the learning part.
Now, you need to go find an attorney who you trust (ask for recommendations) and get an estate plan put together for you.
This can get pricey — anywhere from $1.5k — $5k+. And it stinks having to pay this. I get it. But for the protection of your family, it’s worth it.
So, get going. Create your estate plan and get your sh*t together in the name of your family.