I’m often asked, “Do I need estate planning if I don’t have a lot of money?” The answer is, most often, yes. Estate planning is definitely not only for the wealthy. Take our estate planning quiz to see if you need your own plan:
Do you have an Advance Health Care Directive? In cases where you can’t speak for yourself because of incapacity, an "Advance Health Care Directive" allows you to designate someone to be your voice regarding critical healthcare decisions. This document also lets you specify the level of care you want when death is imminent. Such decisions include your desire for life sustaining treatment including feeding tube, hydration, life-support equipment, and ultimately, organ donation. Failing to document your wishes places your family in the unenviable position of ‘guessing’ what level of care you would want.
Do you have a Durable Power of Attorney that’s less than 5 years old? The Durable Power of Attorney gives legal authority to another person to make financial and legal decisions on your behalf should you be unable to do so because of your incapacity as a result of illness or accident. Without this document, should you become incapacitated, someone will have to hire an attorney, go to court, and get a limited power of attorney—which can be an expensive and time-consuming process. This document should be re-signed about once every 5 years.
Do you have a properly executed will? If you have accumulated any assets, you should consider having an attorney draft a will directing who will receive your assets when you die while also minimizing taxes and settlement costs. If you don’t have a will state law determines who will receive your property. If you have minor children, you’ll want to designate a guardian for them in your will should you and your spouse die unexpectedly. Without a guardian election, the courts must decide who will have custody of your children.
Do you have adequate life insurance? If you have minor children or other dependants, you’ll want to make sure that you have adequate life insurance to provide for their financial support including college tuition. Once you have your life insurance in place, you’ll need to consider setting up a trust through your will. A trustee is someone charged with managing money for your child so choose someone who is good at handling money or choose an institutional trustee such as a bank.
Are you certain of your beneficiary designations? Not all assets pass through your will. In fact many, if not most, of your assets are likely to pass “by contract”. This includes life insurance policies, retirement accounts and jointly titled property such as your home. You’ll want to make certain that these assets that will pass outside of your will are going to whom you wish as well as in the form you wish, whether it be outright or in a trust.
These are just a few areas of estate planning that most everyone should consider implementing now. If you answered, “No” or “I’m not sure” to any of these questions, it’s time to take action. To help you think through these important decisions, contact your attorney or financial advisor. Go to the Resource Center at www.welchgroup.com and then click on ‘Links” for more information about Advance Healthcare Directives (see Living Wills), Life Insurance Needs Estimator, free Life Insurance Quotes, College Costs Estimator and State by State Intestate Laws.