Whether you are newly married or have been together for decades, estate planning is an important part of financial security. While the process can be overwhelming and often intimidating, taking the time to understand all that goes into creating a plan is crucial. Having the right documents in place now will save time and money down the road while protecting your family if something were to happen. In this post, we’ll break down five basic estate planning documents every married couple should consider having in place today.
Wills - outline where you want your assets to go when you pass away
A will is an important document for anyone who wants to make sure that their assets are distributed according to their wishes when they pass away. Having a well-drafted will allows you to name an executor, or personal representative, who is responsible for gathering your assets and distributing them according to your wishes. You also get the opportunity to name beneficiaries of your estate, such as those you would want to receive any money, stocks, or other property left behind. Moreover, if you have children under eighteen years old, you may use your will to appoint guardians to watch over them. By ensuring this basic information is included in your will, you can give yourself peace of mind knowing that even after death you can have control over how your legacy and possessions live on.
Power of Attorney - designate someone to make decisions on your behalf in the event you are unable to do so
The power of attorney can be a powerful tool, allowing you to designate an agent to act on your behalf if you are ever unable to make decisions for yourself. This person, the principal, has the ability to handle any and all financial and legal matters associated with your name, such as paying bills and closing bank accounts, regardless of where you might be in the world. It is important to choose someone whom you trust implicitly as they will be making decisions in your absence. Furthermore, it is also a good idea to stay informed on changes related to power of attorney as regulations change from state to state due to different laws governing the document.
Living Will - specify the medical treatment and care preferences you would like to receive in the event of a terminal illness or injury
Living wills are an incredibly important document to have in case of a terminal illness or injury. A living will lets you specify what medical treatment and care preferences you prefer to receive should such an event arise. This allows control over the kind of healthcare that is administered so that your wishes can still be honored in the event of incapacitation due to medical conditions. Being able to communicate this information during a difficult time can bring peace-of-mind to you and your family, knowing that your wishes are considered in decisions about care and treatment. If you have yet to create a living will, now is the perfect time to make one for yourself or for a loved one who may someday find it invaluable.
Health Care Proxy - assign someone to make health care decisions on your behalf if you’re unable to do so
A health care proxy is a vital document that all adults should have assigned; it is like a guardian angel watching over us. Essentially, it's an agreement made to appoint someone you trust to make healthcare decisions on your behalf if you are unable to do so for any reason. Having this document in place makes sure that the health care system does not take over and make decisions without input from your family or trusted friends. It can often help put minds at ease during a stressful time knowing that someone will be there making sure your wishes are respected and followed; something especially important as everyone's wishes around healthcare differ.
Trusts - transfer legal ownership of assets to a designated individual or group while avoiding taxes and probate court fees
For many people, putting assets into trust is a great way to avoid the lengthy process of probate court that comes when leaving behind an inheritance or other assets. Trusts allow individuals or groups to legally hold title to the assets on behalf of another person, allowing the assets to bypass probate court without incurring estate taxes or other fees. This is especially important in cases where funds are left to a minor child and there must be a legal transfer of ownership without added taxes and fees. Trusts can even serve as long-term guardianships of funds, so people can make sure their hard-earned money lasts through future generations.
Making sure your finances and assets are in order is always an important step for any individual, regardless of their age or life circumstances. Wills, power of attorneys, living wills, health care proxies and trusts are just a few of the legal options available to help individuals secure their plans for the future. It's essential to understand the advantages and disadvantages of each option so you can make an informed decision that best suits you and your needs. For those who have dependents or don't want their funds distributed in line with state law in the event of death, wills remain one of the most critical documents to have securely arranged. Before making any decisions on how you'd like your assets transferred upon death or incapacity, consulting with a financial advisor or experienced professional can be beneficial to ensure you know all your options. Ultimately, preparing yourself financially and legally provides peace of mind when considering what will happen to your assets after life.
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