In the immortal words of Benjamin Franklin, “In this world, nothing can be said to be certain, except death and taxes.”
Let’s add one more certainty to the list: the majority of us avoid thinking about either.
Today we’re going to talk about something most of you would rather dodge: estate planning.
But here’s the kicker:
If you care about your hard-earned wealth and who gets their grubby mitts on it when you’re no longer around to steward it, you need to start thinking about estate planning.
Why?
Because without a plan, the only thing certain is that Uncle Sam and a bunch of lawyers are going to have a field day with your assets.
Let’s unpack this.
The Godfather of All Documents: Your Will
First up, the Will.
No, not the will to get off the couch and hit the gym, but the legal document that spells out who gets what from your estate.
Your will serves as the blueprint for the distribution of your assets and properties.
Without it, your state’s intestacy laws decide who gets what.
When you’re creating your will, you’re not just deciding who gets your prized baseball card collection or your beach house in Malibu.
You’re also picking the key players who’ll make sure your wishes are carried out.
THE EXECUTOR:
Your will’s quarterback.
The executor is responsible for carrying out the terms of your will, navigating the labyrinth that is probate court, settling your debts, and distributing your assets.
This isn’t a job for your flaky cousin who can’t even handle a trip to the DMV. You need someone responsible, organized, and trustworthy.
And, if your estate is complex, they should be able to understand the basics of finance and law or know when to consult with professionals who do.
GUARDIANS:
Guardianship designations are the guardians of your galaxy.
If you’ve got minor children or dependents, this one’s non-negotiable. You need to designate primary and successor guardians who will raise your child(ren) in the event that you/your spouse pass away.
Don’t leave this to the courts to decide.
The Power Players: Durable Power of Attorney & Healthcare Power of Attorney
Next, you’ve got your Durable Power of Attorney. This isn’t some Marvel superhero, but it’s close.
Your DPA is the person you assign to handle your affairs if you’re incapacitated and can’t do it yourself. This includes financial decisions that affect your estate. Choose wisely.
The Healthcare Power of Attorney, on the other hand, makes healthcare decisions on your behalf when you can’t.
Pick someone you trust, who knows your health wishes inside out.
The Inheritance Whisperer: Trusts
Trusts – everyone’s heard of them, but few understand what they do.
In short: they allow you to set terms on how your assets are distributed.
Want your kids to get their inheritance only when they hit 30? A trust can do that.
Plus, they can minimize estate taxes and keep your estate out of probate.
The Unsung Heroes: Beneficiary Designations
Don’t overlook your beneficiary designations.
These dictate who gets the proceeds from your insurance policies, retirement accounts, and other assets.
And here’s the plot twist: these designations override your will. Keep them updated.
The Secret Keeper: HIPAA Authorizations
The Health Insurance Portability and Accountability Act (HIPAA) protects your medical information like a Rottweiler guards a steak.
Great for privacy, not so great when you’re incapacitated and your adult children need to make informed decisions about your care.
This document allows your healthcare providers to disclose your health information to anyone you specify. Without it, your adult children might be left in the dark, unable to get important updates about your condition.
It’s also particularly crucial if your children are over 18. Once they reach this age, you no longer have automatic access to their health information, even if they’re still on your health insurance.
If they’re incapacitated, you could be locked out of crucial medical decisions. Encourage your adult children to have their own HIPAA authorizations, listing you or other trusted adults.
The Silent Witness: Letter of Intent
Lastly, consider a Letter of Intent.
It’s not legally binding, but it gives instructions for what you want done with specific assets or even your funeral arrangements.
Think of it as a letter to your executor or a beneficiary.
