According to several studies, a large portion of baby boomers have not prepared a Will or taken any similar estate-planning measures.
In 2017, only 58 percent of baby boomers surveyed had their estate-planning documents in order. As of May 2019, there’s been little improvement, as two-thirds of baby boomers have not made long term plans for if they become incapacitated, designating power of attorney or similar estate-planning matters.
One reason is obvious – it’s not much fun planning for your death. But there’s another reason – many put it off because estate-planning seems too complicated and time consuming.
When you understand the basic components of an estate plan, the task doesn’t seem quite as daunting.
Last Will & Testament
Your Will is the most important document in your estate plan. Without one, the court will decide how, and to whom, your assets will be divided.
A Will ensures all of your assets are distributed the way you want. If you have young children, it enables you to choose their guardian – not the family court. It also ensures your pets are taken care of when you’re no longer around. When you prepare your Will, you can appoint someone you trust to be your executor and carry out your wishes.
Keep in mind – a Will only covers property subject to probate. There are other assets that fall outside of probate which require naming a beneficiary. These include: IRA accounts, 401(k) plans, life insurance, property held in a trust, and jointly owned property. It’s important to always review and update the named beneficiaries of these assets every year or two.
A Living Trust
Though there are many types of legal trusts, a valid Living Trust is a good way to help your family avoid probate court.
One of the great things about it – a Living Trust can be used to manage your estate before you pass on. Even though the trust owns your property, you can name yourself as trustee and add or remove assets such as property, jewelry, art, antiques, real estate, and stocks and bonds, as you see fit.
If you become incapacitated or pass away, this type of trust enables your selected trustee a relatively easy way to manage or distribute your assets.
Talk to a reputable attorney who can fill you in on the finer details on how a Living Trust compares to other types of trusts.
Durable Power of Attorney (DPOA)
A Durable Power of Attorney remains in effect if you become incapacitated or mentally incompetent. With a comprehensive DPOA, you can select your agent and direct them to make specific decisions about your property, finances, investments, paying your bills, and sign documents on your behalf. For more details about the advantages of this type of estate-planning document, see the article titled: Top Benefits Of A Durable Power Of Attorney.
Advance Health Care Directives
When a medical crisis leaves you incapacitated and unable to make decisions for yourself, advance healthcare directives help ensure your preferences are respected. The official titles of these legal documents vary from state to state and it’s important to check which documents your state law requires:
- Living Will: a document that describes your preferences for health care treatment
- Durable Power of Attorney for Health Care: also known as Medical Power of Attorney, Health Care Power of Attorney, Designation of Health Care Surrogate, or Health Care Proxy, this document names the person you’ve chosen to make health care decisions for you
- Advance Directive: a document that combines a Living Will and Power of Attorney for Healthcare
For more details, see the article titled: Make Your Wishes Known With Advance Health Care Directives.
A Few Words About Life Insurance
Life insurance can also be an important component of your estate plan. It helps eliminate the burden on survivors who may need to raise cash to cover immediate expenses related to your death. Speak to a reputable insurance professional to discuss the many options available to you.
