Estate planning is putting together a plan that lays out which individuals or organizations will inherit your assets after your passing. It also includes your instruction for the management of your assets and care should you become unable to make medical or financial decisions for yourself during your lifetime.
If you do not have an estate plan, state law will decide what happens to your assets, dependents, and in some cases who manages and cares for you.
The assets in your estate plan may include checking and savings accounts, real estate, investment accounts, stocks, bonds, mutual funds, retirement accounts, digital currency, business ownership interests, life insurance, jewelry, automobiles, family heirlooms, art, collectibles, antiques and other personal belongings.
Why is Estate Planning Important? Proper estate planning will make sure that your assets end up where you want them after your death. It also allows you to put instructions in place to take care of your loved ones.
If you are incapable of caring for yourself or making important financial decisions, medical or other major life decisions, you can nominate one or more people to manage your finances and make important decisions on your behalf.
Who needs estate planning? Estate planning is for everyone, regardless of economic status. A common misconception is that only wealthy people need an estate plan. It is beneficial for everyone who has assets (including a simple bank account or small home) and loved ones, especially minor children or others depending on you.
An accident or debilitating injury or illness can affect us at any time. You need to plan so everyone knows your wishes.
What is the difference between wills and estate planning? Wills and estate planning differ. A Will is a list of instructions for the distribution of your assets after your death. It only comes into effect at your death. It makes no provisions for disability or incapacity.
An estate plan is a far broader action plan for your assets and dependents that will apply during your lifetime as well as after your passing. Among other things, it will provide instruction and designate people who you choose to manage your financial affairs and medical decisions in the event of your incapacity or disability.
When do you need to start estate planning? As a legal adult, you are responsible for your finances, power of attorney and health care. You should review your wills, and estate plans every three to five years and update them at every significant change in your life such as buying a new home, marriage and remarriage, at the birth of a child, after inheriting, divorce, and becoming a grandparent.
What documents are needed for estate planning? You should have a minimum a Last Will and Testament, durable power of attorney, medical power of attorney, advance medical directive (living will), HIPAA authorization.
It is always a good idea to create a folder, binder or some paper trail for the person you have nominated as your executor and agents under your durable and medical powers of attorney. This should include instructions on accessing safe deposit boxes, bank accounts, investments, insurance, digital currency, passwords, and your social security number. Your agents need to know where to look for your assets.
Planning for our death or disability is not pleasant, but it is a gift to those left behind. A plan helps make your wishes clear, it can eliminate family squabbles and be a guide and authority in the event of a disability.
None of us plan for anything but living perfectly healthy lives, but things happen so, why not say what you want to happen while you can.
This article is provided by the Law Office of Lasca A. Arnold, PLLC.
This article is provided by the Law Office of Lasca A. Arnold, PLLC.
Comment
Comments