Estate Planning from a Financial Advisor
For many, estate planning is a task that gets continually delayed. Some people believe it is only needed by the wealthy. Others avoid it because it requires tough or uncomfortable choices.
However, creating an estate plan is essential for nearly everyone. A good estate plan does more than distribute your assets. It should include important documents for sensitive issues.
For example, you need to choose a guardian for your children if you die. You should also outline how to manage your medical decisions if you cannot make them yourself.
With the guidance of legal and financial advisors, setting up an estate plan is more manageable than you might think. These professionals can help ensure you address all necessary elements and meet your unique needs.
Here are 5 essential steps to help you get started:
Set Up a Power of Attorney
A power of attorney is a legal document. It lets someone you trust make financial or medical decisions for you if you cannot make them yourself.
This may include managing money for medical expenses or involve handling insurance problems. If you have a medical power of attorney, you need to ensure your healthcare wishes are followed.
Usually, financial and medical powers of attorney are separate documents. You might want to choose different people for each role. For financial decisions, choose someone you trust completely. They may need to manage your mail and talk to banks. They will also handle asset transfers and pay your bills.
For medical decisions, the person you designate, often called a healthcare proxy or medical power of attorney, will use your living will (also known as an advance healthcare directive) to guide their choices. Many opt to name a spouse or adult child for this role, with an alternate named in case the primary choice is unavailable.
It's crucial to have an open discussion with the person you choose to ensure they fully understand your wishes.
Draft a Living Will
Your estate plan is not just about sharing your assets. It also helps your loved ones make important medical decisions if you are unable to express your wishes.
A living will typically includes instructions for situations like:
● Use of life-sustaining treatments, such as blood transfusions, medications, or surgeries
● Decisions around artificial life support or ventilator use
● Pain management or palliative care options
● Administration of food and water, including tube feeding
● Do-not-resuscitate (DNR) orders
You can tailor a living will to reflect your specific preferences, including religious views or organ donation wishes.
Working with an attorney to draft your living will as part of your overall estate plan is a good idea. Once it is completed, share a copy with your primary care doctor. This way, it will be in your medical records and easy to find in an emergency. These directives usually go with your medical power of attorney.
Create a Last Will and Testament
A last will and testament is a vital part of your estate plan. It has two main purposes. First, it indicates how your assets will be shared after you die. Second, it names a guardian for any minor children.
Without a will, these decisions will likely be made by a court, which could result in outcomes that don’t align with your wishes. Your will can be as straightforward or detailed as your estate requires.
The first step is to consult with a qualified attorney who can guide you through the process. Many lawyers charge a flat fee for creating a basic will. The cost can change depending on the complexity of your situation. It may also be helpful to work with a financial advisor to organize and inventory your assets.
You will also need to name an executor. This is the person or institution that will manage your estate to make sure your will is followed. Consider choosing an alternate executor in case your primary choice is unable or unwilling to serve.
The executor’s duties may include cataloging your assets, selling property, and settling any taxes. Choose someone who is responsible, calm, and dependable and willing to take on the executor role.
Review and Update Your Estate Plan Regularly
While completing an estate plan is a significant achievement, it shouldn’t be left untouched. As time goes on, your family dynamics and financial situation may change. Your estate plan should also change to meet your needs and wishes.
One important aspect to revisit is your beneficiary designations. Many financial accounts, like insurance policies, retirement accounts, and brokerage accounts, need you to name beneficiaries. These names usually matter more than what is reflected in your will.
As you update your estate plan, take time to check the beneficiaries on all your accounts. Make sure they match your overall plan. A will does not override beneficiaries on your accounts.
It is a good idea to review your estate plan every 2 to 5 years and update it after major life events. These events include marriage, divorce, having or adopting children, or losing a loved one.
Milestones such as buying a new home or changing your financial goals are important. Major financial changes also require attention. These events should prompt you to carefully review your plan.
It can be tempting to delay creating or updating your estate plan, but the peace of mind it brings is well worth the effort.
Bottom Line
Estate planning might seem difficult, but it is an important step. It helps to make sure your wishes are followed. It also ensures your loved ones are cared for in the future. Don’t wait—take the time now to create or update your estate plan and help secure your legacy for the future.
Sources:
https://www.fidelity.com/viewpoints/wealth-management/estate-planning-made-easy
Disclosures:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
This material is provided as a courtesy and for educational purposes only.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information
