Where There’s A Will There’s A Way

Proper estate planning is like a parachute –

when you finally need it, it better work.

Where There's A Will There's A Way

As you ponder that long overdue meeting with an estate planning attorney, what is it that you really need and why do you need it?

Why Do You Need It?

Ignoring the obvious – an orderly distribution of your money – for a moment, I’d like to appeal to your emotions. Imagine your death. Who will be sad? Without some basic estate documents in place, you will be asking the very people who are trying to grieve for you to also take on a messy responsibility. They will have to pay for your funeral. They will have to pack up and distribute your things. They will have to pay your final bills without access to your money. They will have to take care of your kids. The list goes on. Smart estate planning doesn’t make those things go away, but it does provide a road map and a smoother road to accomplishing them. And, in times of grief, your loved ones need all the support they can get.

Everyone Needs The Basics:

The Will

Oh, the fun your family will have fighting over your vast collection of Beanie Babies or the costume jewelery you inherited from Aunt Sally if you don’t have a will. You may think the distribution of your earthly possessions will be orderly and fair, but don’t count on it. Do your family, however extended they may be, a big favor and tell them who gets what. Many people don’t bother with a will until they get married or start to have kids, but single adults need one as well. Imagine your assets floating around probate court for years on end, while someone you don’t know gets paid to figure out who should get your stuff.

Don’t feel like designating specific items for specific people? At least name someone you trust as the executor of the will and then trust they will distribute your things in a fair and reasonable manner.

BEST WAY TO DO THIS- see an estate planning attorney.  Check out estate planning attorneys in your area at your local Bar Association’s website.  Find that at the American Bar Association’s website – www.abanet.org.

QUICK WAY TO DO THIS- draft your own using Quicken Willmaker Plus software.

The Power of Attorney

Lots of things can happen before you actually die and the will kicks in. Because of these things (car accident, incapacity, stroke, Alzheimer’s) wouldn’t it be nice if someone you trust could make the decisions you are no longer capable of making about your money? Imagine having a stroke and not being able to pay for your care immediately because no one but you can access the necessary funds. There are different types of powers of attorney, but they basically name someone to conduct your business on your behalf when you are incapable of doing it.

Check out the complete list of types of powers of attorney in this aarp.org article.

The Health Care Proxy

And what if you need medical care? This document allows someone you trust to talk with the doctors and make those difficult decisions about your care when you aren’t able to do so.  It can also be called a health care power of attorney and often pairs with a living will (which speaks to your willingness to end your life support)

State requirements may differ, so check out your specific requirements at this excellent legal website, www.nolo.com

And One More that you can take care of yourself –

Make sure you have named beneficiaries on all your accounts. Most of us are pretty good about naming beneficiaries on our 401k or IRA accounts when they are set up but here’s something a lot of people don’t do:

Name beneficiaries on your bank and brokerage accounts. This is especially critical if the account is in your name only.

Banks call these Payable on Death (POD) agreements and brokerages call them Transfer on Death (TOD) agreements.  They simply allow you to name beneficiaries for the account so the money or investments can be transferred immediately to your heirs, bypassing probate.

These are just the basics to get you started toward a more orderly estate plan.   There are other estate planning documents you may need, such as revocable living trusts, irrevocable life insurance trusts, charitable remainder trusts, etc.  that  should be discussed and handled by a good estate planning attorney.  And while you aren’t going to benefit personally by doing a single one of them, just think of the potential legacy you will be leaving without them:   financial confusion, bitterness &  protracted court proceedings.

It’s not just about the money you pass on, it’s about the work you leave behind.

Photo by:  Casey Geib

About the author

Lea Ann Knight, CFP®

Lea Ann is the Principal of Garrison/Knight Financial Planning as well as the creator of the financial literacy site, Financially Fit After 40. She also writes a monthly column as the Money Expert for All You Magazine.

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