Estate Planning 101

Estate Planning 101

Estate planning can be overwhelming to navigate. You are planning for the worst, hoping to maintain the security, comfort, and happiness of loved ones you leave behind. Estate planning can happen at any point in life but should happen if you have a child or elderly parents, own a home or have savings. The basics of estate planning start with five documents that ensure your wishes are met and also can save families money in legal and court fees and grief that comes if legal battles occur. Those five documents are living wills, living trusts, power of attorney, health proxy, and a last will. Here’s an overview of the differences of each and why they are important. 

Living wills (also called advance medical directive)

  • Specifies medical treatment wishes and directives.
  • Appoints a designee to manage your healthcare.
  • Key considerations: What life support directives are you comfortable with – do you want to be on life support for a long time at the desire of your family, or do you wish to be removed from life support if your life is no longer viable? What are your resuscitation wishes – how far do you want doctors to go in order to save your life? Living wills answer these questions and ensure that your wishes are met.

Living trusts

  • Specify last wishes (life support, organ donation, burial procedures, etc.) and appoint someone to carry them out.
  • Transfer assets into a trust if you are incapacitated before allocation to designated beneficiaries upon your death.
  • Indicate guardianship of children in the event of incapacitation.
  • Those with children – especially adult children – or significant assists exceeding a few hundred thousand dollars should have a living trust.

Power of attorney

  • A durable power of attorney is a crucial document regardless of age. This document names a legal and financial affairs agent in the event of your death, incapacitation or disablement.
  • Power of Attorney designees can pay bills, make insurance claims, manage investments and file tax returns. Without a designated power of attorney, a court will appoint a court-appointed guardian. Legal fees and roadblocks can be significant if power of attorney has not been designated prior to incapacitation.

Last will

  • Specify last wishes (life support, organ donation, burial procedures, etc.) and appoint someone to carry them out.
  • Transfer assets to beneficiaries upon death.
  • Appoint an executor who is charged with selling your estate.
  • Indicate guardianship of children in the event of death.
  • Key considerations: Who should be the executor? Who should have your assets and how should they be divided? Who should receive personal heirlooms? Who would gain custody of my children?

Health Proxy

  • A health care proxy makes medical decisions for you in the event that you cannot make decisions for yourself. This agent should be someone that you trust deeply to honor and carry out your wishes.
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