If 2020 taught us anything, it is that life comes at you fast. In early 2020 we heard about the COVID 19 virus being in China, and shortly after, the world in which we know it shut down. By mid-March 2020, adults were working remotely at home, students were learning virtually, and quarantine, isolation, and social distancing became household words. The speed at which lives ended due to this pandemic has been full of head-spinning lessons about how quickly life comes and the need to have your wishes in writing so that you can control who gets what when it’s your time.
One thing remains true, terminal illness and death aren’t things that anyone is eager to discuss. However, when it comes to knowing that your wishes are granted to your specifications and that every single possession you’ve worked hard for or own is going to the person(s) you want it to go to, estate planning becomes necessary. Below are some answers about planning your estate, and although it sounds complex, it doesn’t have to be, and some don’t even need an attorney, only a plan. And, regardless of age, marital status or how much in assets you own, just about everybody owns something and therefore they have an estate to plan.
What is Estate Planning?
Planning an estate is what the name implies; it plans for what will happen with all of your possessions (your estate) if you become disabled, incapacitated, or die. It is a way for you to determine who will handle what aspect of your estate and precisely what you want them to do.
What Documents Should Be Included When Planning an Estate?
Although there are several very different documents in planning an estate, they all have different functions but are equally important in planning an estate. Some of those documents are:
Last Will and Testament
A will is a tool used to give your possessions to those you want when you are deceased. It is where you determine and make known what is best for underaged children or pets. It names an executor who will oversee everything and ensure that your wishes go to whom they are designated.
In a will, you can determine down to the penny how you want your finances divided and any restrictions you wish to place on the person that you give your assets.
If there is no will in place when you die, state laws typically control what happens with your possessions, including the recipients having to pay income taxes on any money they receive. Sadly, many people incorrectly think that planning their estate stops at a will.
Beneficiary Designations
Although your will specifically designates who and how you want your finances divided, beneficiary designations previously made on insurance policies, retirement plans, or bank accounts will supersede your will. You must keep a list of these designations or change them to match what you state in your will.
Durable Power of Attorney
A Durable Power of Attorney is an essential document for giving someone the power to make financial, health, and legal decisions that are in your best interest. Since you are alive while they are making these decisions and you have to be legally competent to make a Power of Attorney. In addition, you want to give the power to a person you trust with your life – because they have your life in their hands. Keep in mind, though, that the powers bestowed on a person vanish automatically when you die.
Health Care Power of Attorney and Living Will
This document sounds a lot like some of the documents mentioned above, but it is not. These documents give you a chance to explain what kind of care you want if you become disabled or incapable to do so. For instance, in a living will, you may state that you only want to be on a ventilator for 72 hours or that you don’t want multiple surgeries to save your life should they become necessary.
The blessing of this document is that it can be as straightforward or as complex as your want.
Letter of Intent
Typically a handwritten document, a letter of intent is an informal way of communicating some minute details about your wishes to your family or loved ones. It can include things like what dress you wish to be buried in, what music you want to be played at your funeral, or details about any special reading you want at your services.
The letter of intent should also include passwords, PINs, and location of safe deposit boxes & keys. It should act as a guide to those planning your funeral.
List of Important Documents
A list of important documents can change, so it doesn’t make sense to add it to your will. However, keep a list and point your loved ones to this information is a lifesaver for them. Some of these documents include:
Life insurance policies
Pension or retirement accounts
Annuities Bank accounts
Birth Certificates
Divorce records
Bank accounts
Real estate deeds
Stocks, bonds, and mutual funds
As you can see, planning your estate can be as simple or complex as you wish. For some, no attorney is even necessary and the only things needed are plans, a pen and paper. However, if you have more assets you will want to consult an attorney. After all, everyone wants their hard earned estate to go where they have directed.