KEY POINTS
Estate planning is a relatively straightforward process. You don’t need to be wealthy or older to begin estate planning; the sooner you start, the better. The key actions include:
1) Drafting a will and a living will.
2) A healthcare power of attorney.
3) Naming your beneficiaries.
You can avoid much pain and suffering later by getting your healthcare directives and estate for your protection. To make it happen, estate planning doesn’t require you to be wealthy or older. Experts say that regardless of wealth or age, almost everyone should think about how their assets will be distributed after death. They also need to consider who will make the decisions if they become incapacitated later.
Your will
A will outlines how you want your assets to be divided after you pass away. A will is easy for most people. The form asks you to name an executor and another executor if your first choice is unavailable. The form requires information about who will receive what assets and what conditions must be met before the beneficiaries can receive their inheritance. For example, minors need to reach a certain age. Name a guardian for dependent children. It is best to have one executor and one guardian.
You may not want all your assets to be transferred to your spouse or children if there is no will. It might be more beneficial to have one person care for dependents and another manages the resources. Many believe that all assets and investments belong to their spouse if there is no will. This is not always true. State law often dictates that the state will create one if there’s no will. In many cases, assets will be equally divided among all heirs. Your spouse or children may challenge your wishes if you do not have a will.
Designating your beneficiaries
A beneficiary designation for specific assets is a simple and inexpensive alternative to executing a will in court. This can be done with any asset, including bank accounts, investment accounts, personal property, and real estate. It also reduces the costs of the estate settlement in court.
Your power of attorney to provide healthcare services
If you cannot make your own healthcare decisions, choosing someone to take care of you is essential. The healthcare power of attorney allows someone to give authority to another person to make these decisions. Anyone can be chosen, but you must trust them fully. You can also use the healthcare power of attorney to specify medical treatment and healthcare you do not wish under certain circumstances. These wishes will need to be followed by your healthcare agent.
Most people prefer to have control over their decisions, rather than allowing loved ones to make them. Do them a favor by filling out simple forms. You can always update them later if you have a change of mind. Both your doctor and your healthcare agent must have a signed copy.
In a living will, specify your wishes.
A living will is similar to the healthcare power of attorney, providing instructions for life-saving treatment you may want in different circumstances. Your healthcare agent will follow your wishes. A separate document is an “order to do not resuscitate” (DNR), and it is part of a living trust that specifies under which conditions you will not accept life-saving treatment. You should be aware that many healthcare institutions require people to fill out their forms regarding health care directives. You should also ensure that your agent is available if you are admitted to an emergency room, and this will allow them to recognize their authority immediately.