The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
Estate planning is a conscious approach to organizing your personal and financial affairs in order to deal with the possibility of mental incapacity and death. The biggest mistakes you can make in estate planning are to plan improperly, or to fail to plan at all. Without the proper estate planning documents to protect your wealth and wishes, you can lose out on several benefits.
Here are the main benefits to having a clearly laid out estate plan:
The smartest way to protect your wealth and wishes is to have a foundational estate plan drafted by an estate planning attorney. The foundational estate plan includes four essential legal estate planning documents: a will, living will, a durable power of attorney for health care and a durable power of attorney for financial decisions. Too often, individuals make the mistake of only having a will and fail to prepare the other three critical documents. The smartest way to protect your wealth and wishes is to have all these valuable documents in place.
Another misstep individuals make is either preparing these documents on their own through available resources online or by using an attorney who does not specialize in estate planning. Although it can be less expensive to take one of these routes, the benefits obtained by receiving expert counsel from an estate planning attorney and the risks that are mitigated from improper planning far outweigh the expense.
Although a good majority of your wealth and wishes can be taken care of with language in the below four documents, there are certainly advanced estate planning techniques outside of these documents that can be beneficial to your particular situation. Like any other financial document or product available, it is always important to be educated, and to explore the pros and cons of any such technique with the experts before incorporating them into your estate plan.
A will contains a detailed list of instructions as to how your property should be distributed after you die. If you die without a will, the probate court directs how your property will be distributed according to the state’s intestate laws. If you have minor children, a will should contain provisions for designating a guardian, as well as instructions on how and when your minor children should receive your assets.
Sometimes called a health care proxy, a living will contains a written set of instructions to your physician as to whether or not you want to receive life-sustaining procedures if you have been diagnosed with a terminal condition, end-stage condition, or are in a persistent vegetative state. It also gives guidelines for your family members to follow if you become terminally ill.
Sometimes called an advanced medical directive or a durable power of attorney for health care, this document allows you to designate a health care agent to make medical decisions for you if, for any reason, you are unable to make them for yourself. It can also be used to designate someone to serve as your guardian or conservator in the event a court determines that you have become mentally incapacitated.
The financial power of attorney document allows you to designate someone to manage the affairs of your estate, including financial decisions, if you are unable to manage them yourself. It allows you to delegate to the person of your choice the ability to manage assets that are titled in your individual name, including retirement plans, and assets titled in joint names as tenants in common.
Once these documents are in place, you should review your estate planning documents at least every few years, or if there is a significant life change such as the birth of a child, divorce, death or inheritance.
This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.
Image: Ingram Publishing
March 11, 2021
Personal Finance
March 1, 2021
Personal Finance
February 18, 2021
Personal Finance