National Estate Planning Awareness Week occurs every year in mid-October to draw attention to this critical yet often overlooked element of financial peace and preparation. Estate planning is the careful process of arranging for the management and legacy of your assets during your life and after your death, though many people don’t even consider estate planning until they are approaching retirement. The truth is that estate planning can- and should!- begin at any young age. It is never too early to take control of your assets, and these documents will help you accomplish that goal.
A will is the cornerstone of your estate planning because it states exactly how your property will be distributed after your death. If you fail to create a will, state law will dictate the disbursement of your assets, meaning there is no guarantee that your loved ones will be protected. A will also serves the important role of naming an executor to manage and settle your estate, so you will know that a trusted family member or friend is in charge of your business.
Durable Power of Attorney
Durable power of attorney is very important because it authorizes the exact person who should act on your behalf, in your best interests, if you were to suddenly become physically or mentally unable to handle your financial responsibilities. The person you give power of attorney can pay your bills, file taxes, make direct investments, and more, all on your behalf.
Advanced Medical Directives
While a durable power of attorney handles your financial matters if you become disabled, advance medical directives spell out the exact medical treatments you want or don’t want if you ever cannot express them yourself. Without advanced medical directives, medical professionals are legally required to prolong yourself as long as possible through any means necessary. You can craft your advanced medical directives in your will, through a Do Not Resuscitate order, or with a durable power of attorney for health care.
Also known as a revocable trust, is a written document that places your assets into a trust, a separate legal entity, during your life. Upon your death, your assets are passed through that trust to the recipients of your choice. This allows your assets to avoid probate, a time consuming and costly process that temporarily prevents distribution. A trust also prevents information about your estate from becoming public knowledge, so you can protect your privacy even after your passing if you choose.