Estate Planning is for everyone

“I am no Rockefeller or Carnegie. I am not rich. I do not need to worry about estate planning!” Is this what you think? Then think again, because estate planning is for everyone, not just the rich.

You have worked hard for everything you have. So it makes sense to protect your assets in the event something should happen to you. An estate plan can help preserve, protect and manage your estate at the time that unexpected life events occur and beyond.

No matter what your age or economic circumstance, there are four things you and everyone should do. These four documents will ensure that you and your affairs will be dealt with the way you want. Without these documents, the government will make your decisions for you. Simply stated, you need a durable power of attorney, a healthcare proxy, a letter to your survivors and a Will.

You may think death is the end of the line, but think again! With the miracle of modern medicine, the most likely scenario that faces us all is a prolonged life in old age, when our physical and mental capacities may be reduced. If we can no longer take care of ourselves, we most likely can no longer manager our finances.

Durable Power of Attorney allows someone you designate and trust to manage your financial affairs if you are alive but incapacitated. The person you name will keep your financial and legal life from falling apart. Bills will be paid, investments managed and taxes filed.

Healthcare proxy allows the person you name to make healthcare decisions for you should you be mentally incapacitated. It allows you to decide in advance which life prolonging procedures you want administered or foregone. It is sometimes called a “living Will” or a “durable medical power of attorney.”

Letter to Your Survivors is the most commonly omitted document. You may know that your life insurance and other important documents are at the bottom of your fourth bureau drawer, but does anyone else know that? You need to list as much as you can, such as social security and veterans information, location of your Will and other estate planning documents, car and land title certificates, where you keep the key to the safety deposit box. And so forth.

Will is the one document we all know we should have, but frankly, most of us of not have one. The government decides what to do with your assets if you don’t have a Will. Writing your Will is a lot easier than preparing your annual income tax return. You know you must do it. So do it!

Beyond these four basic documents are a couple more estate planning elements you will want to consider.

Long Term Care Insurance is a wise investment. If you become unable to perform routine daily functions, such as dressing yourself, then long term care insurance will pay the expense of having someone help you, whether in your own home or elsewhere. If you are working and your employer offers it, then sign up for it. Increasingly employers are offering it to employees. It is also available to individuals from many insurance companies. It will protect your assets, so that you will have something left for your Will to direct to your heirs.

Beneficiary Designations are often forgotten about. Your life insurance policy, your retirement accounts (IRA, 401k, 403b), and even your mutual funds and brokerage accounts allow you to designate a beneficiary(s). Review these designations to make sure they reflect your wishes. If you wish to include charitable giving in your estate plan, it is easy to designate a charity(s) as the beneficiary of one of these assets.

The size and complexity of your estate may dictate the need for some sophisticated estate planning techniques and tools. Do not hesitate to contact an experienced estate planning attorney, financial planner or accountant. The fees you pay for their professional services will be well invested at ultimately it will save you more than it costs.

Most people procrastinate on preparing an estate plan because it seems like such an enormous task to undertake. Consider the incremental approach. Every month or two, pick one element to work on. Perhaps you will start with having your Will prepared then later write a letter to your survivors. Step-by-step you can put an entire estate plan in place.