Who Needs an Estate Plan and Why?
Everyone. A will tells the world exactly where you want your assets distributed when you die.
It’s also the best place to name guardians for your children. In addition to a will, there are plenty of other unpleasantries that make you unable to manage your own affairs for a while — that can go much more smoothly for you and your loved ones if you’ve prepared for them ahead of time.
What Does an Estate Plan Include?
An estate plan has several elements: a will; assignment of power of attorney; and a living will. For some people, a trust may also make sense.
How Much Does an Estate Plan Cost?
Typically a basic will plan costs $300-$2,000.
This includes a will, a living will, a health-care proxy and a power of attorney. More complex plans may include long-term tax planning as well as provisions for a bypass trust to take effect upon first spouse’s death.
So a Will Governs Where All My Money Goes?
Not all of your assets are governed by your will. Things like retirement accounts and life insurance go to the people you name on beneficiary forms. Changing your will or creating a trust won’t automatically change your beneficiaries on these accounts, so make sure you update information on all your accounts.
What is a Living Will and Health Care Proxy?
A living will is a statement of your wishes for the kind of life-sustaining medical intervention you want in the event that you become terminally ill and unable to communicate.
Most states have living will statutes that define when a living will goes into effect. You increase your chances of enforcing your directive when you have a healthcare agent advocating on your behalf.
You can name such an agent by way of a healthcare proxy, or by assigning what’s called a medical power of attorney. You sign a legal document in which you name someone you trust to make medical decisions on your behalf in the event that you can’t do so for yourself.
A healthcare proxy applies to all instances when you’re incapacitated, not just if you’re terminally ill.
Why Should I Assign Power of Attorney?
No one is immune from aging or the loss of mental clarity that may come with it. And you’re never immune to health crises that may leave you unable to handle the business of your life: paying bills, managing investments, or making key financial decisions.
Granting someone you trust the power of attorney allows that person – known as your “agent” or “attorney in fact” – to manage your financial affairs if you are unable to do so.
Your agent is empowered to sign your name and is obligated to be your fiduciary – meaning they must act in your best financial interest at all times and in accordance with your wishes.
There are different kinds of powers of attorney, but in estate planning there are two essential types you should know:
The first is the “springing power of attorney,” which only goes into effect under circumstances that you specify, the most typical being when you become incapacitated.
There is also the “durable power of attorney.” It is effective immediately, and your agent does not need to prove your incapacity in order to sign your name.
An attorney can help you decide which form makes the best sense for your circumstance. In any case, take care in choosing your agent. That person should be competent, trustworthy, willing to take on the burden of your affairs, and financially secure.
Stay On Top of It
A marriage, divorce, or new child or grandchild can change your estate plan. Get the help you need to make appropriate changes and make sure that your wishes never go out of style.
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