If there is one thing the Coronavirus has taught us, it is the importance of being prepared financially for the unexpected. While we do not face a pandemic very often, we will inevitably experience unforeseen illness, injuries and ultimately death. When these tragedies occur, the financial impact on our families and loved ones can be significant.
While we cannot predict the future, we know a well-crafted estate plan can make things easier for the people we love. Creating an estate plan can help answer important questions like: Who gets what when I am gone? Who will take care of the kids? Who will step in if I cannot make my own decisions? How can I protect assets from creditors, including long-term care costs?
Estate planning is not just for the wealthy or older generations. Anybody can benefit from an estate plan. Here are five key things you will want in your estate plan:
1. Last Will and Testament – Usually the main document in an estate plan, a Will states who you want to inherit your property and other assets, who you want to be in charge of your Estate affairs (i.e. executor or personal representative), and names a guardian to care for young children should something happen to you and the other parent.
2. Financial Power of Attorney (POA) – A POA allows you to choose a person to act on your behalf when you are unable to do so yourself. This person can pay your bills and make other financial decisions for you. Without a POA, a court could decide what happens to your assets if you are unable to make these decisions. The alternatives for your family are very costly and involve court proceedings.
3. Advance Health-Care Directive (AHCD) – An AHCD designates another person (usually a spouse or family member) to make important healthcare decisions on your behalf if you become incapacitated. This can also describe your preference for end-of-life care and outlines your funeral and burial wishes.
4. Designate a Guardian – If you have minor children, picking a guardian is important. Make sure the individual or couple you choose shares your views, is financially sound, and is genuinely willing to raise children. In order to give this individual priority over others, you must nominate them in your Will.
5. Beneficiaries -- Naming a beneficiary for bank/credit union accounts, retirement plans, and insurance policies makes the account automatically "payable on death" to that person(s) and allows the funds to avoid the probate process.
While there are many online “do it yourself” options available to create a Will and other estate planning documents, it may be worth the time and investment to seek out a qualified professional to help answer your questions and guide you through the estate planning process. Often times, the “do it yourself” options may be invalid or create more expensive problems than seeking counsel instead. Taking these steps to safeguard your family’s future and protect your assets will bring peace of mind knowing you are prepared for the unexpected.