People are often surprised when they learn what estate planning encompasses. It’s not just for the wealthy, and it’s more than about distributing assets on death.
Even if your “estate” is a single family home, apartment or condo and your assets include a few retirement accounts and a stack of photo albums from the 1960s, you still need an estate plan. That’s because an estate plan includes more than directions on how assets should be managed after you die.
WMUR’s recent article, “Money Matters: Importance of estate planning,” starts with some basics. An estate includes all of the property that you own. It is the outright ownership or ownership you share with someone else, like your home, bank accounts, investments and heirlooms. Managing these assets through all of your life events is the objective of an estate plan. It also includes a plan for what you want to happen with your healthcare and finances if you become incapacitated and can’t communicate your wishes. This is done with a healthcare directive and is a part of estate planning.
Here are a few other items that you need to consider with the help of a qualified estate planning attorney:
- Financial plan. You should have a firm grasp of your finances and your family situation.
- Will. The key document that all plans should contain. A will spells out the property you wish to leave to family, friends, and organizations. You should also name a personal representative to manage the probate process.
- Guardianship. Your will should also designate guardians for your minor children, so you can say who will rear your children, if you and your spouse both die.
- Directives. This includes durable powers of attorney for finances and health care. You can name individuals who you trust to take handle your finances and make health care decisions, if you’re unable to do so. Without these documents in place, the court will appoint someone to manage your finances. This could be someone who is unfamiliar with you and your situation.
- Trusts. A trust lets funds be managed by a person or group for the benefit of others pursuant to the instructions in the trust document. Blended families, families that include children with special needs, and situations where control over the funds for an extended period is needed, are all potential scenarios for a trust.
- Beneficiary Designations. Life insurance proceeds and retirement accounts will pass via beneficiary designations, so these should be current and aligned with your estate plan.
- Funeral plans. You can leave specific instructions about your final arrangements, such as being buried or cremated, as well as electing to donate your organs.
When an estate plan is in place, you gain the peace of mind of knowing that your family doesn’t have to guess what you wanted. If you don’t have an estate plan, the laws of your state will be applied by the court, but it might not be what you had in mind.
A qualified estate planning attorney will work with you to cover all of the basics.
Reference: WMUR (June 1, 2017) “Money Matters: Importance of estate planning.”