Apr 28, 2016

Estate Planning 101: Shaping Your Future, The Essentials

Whether you have a complex financial situation or a simple one, estate planning is a way to take care of yourself and the people you love. Even if you find the thought of it distasteful, if you fail to address this yourself, state law will dictate what happens. The state will handle your affairs, distribute your assets and decide, if necessary, who should be guardian of your (minor) children. These decisions by the court are unlikely to match exactly with your wishes. In addition, unclear wishes can create family turmoil in an already difficult situation, when faced with the loss of a loved one.

In planning for your estate, there are certain key documents that should be considered:

Will: A will should clearly define the transfer of assets, assign guardianship for minor children, and name an executor to be in charge of your estate and help distribute the assets. It can also create a trust that takes effect after death. A will is a public record and usually goes through probate.

Durable Power of Attorney: This appoints a trusted person to act on your behalf in financial and legal matters.

Health Care Proxy: This authorizes someone to make medical decisions on your behalf.

Health Care Directive or Advanced Directive: This expresses your wishes in regard to end-of-life care, rather than leaving the decision in the hands of the person you named as your health care proxy or if unnamed, leaves the decision up to your immediate family, who may be unsure of your wishes and may experience great anxiety in trying to make end-of-life decisions.

Living Trust or Revocable Trust: A trust is a private document and protects your assets, provides for your care if you can no longer handle your own affairs and determines who will receive property when you die. It usually avoids probate and appoints a trustee or trustees to distribute your property.

A Personal Property Memorandum provides information to your executor about any additional assets not listed in the will that you wish to have passed down to specific people or additional guidelines for distribution of personal property. It is a private document, unlike a will.

A HIPAA Release: Gives doctors and hospitals permission to share medical records with people in addition to your health care agent.

Whether you have a lot to pass on or a little, your thoughtfulness in providing clear direction will give your heirs greater peace of mind.  Planning ahead for any tough decisions to come and for any financial assets that need to be distributed shows you cared enough to take care of things ahead of time and ensures your wishes are fulfilled.

Source: Estate Planning Smarts, A Practical, User-Friendly, Action-oriented Guide, ©2009, Deborah L. Jacobs