Did you know that almost 60% of Americans don’t have an estate plan? This presents a huge financial problem for anyone who wants to continue to grow their wealth, create family wealth, or to use their money in a way that leaves a legacy long after they’re gone.
What is Estate Planning?
If you’re asking yourself – wait, what’s an estate plan? – you’re obviously not alone. An estate plan is a roadmap for your wealth and your physical care in the event that you die, or if something happens to you that makes you unable make decisions about your care. I feel that a lot of content minimizes this, or beats around the bush. The truth is simple: we’re all going to die. And many of us are going to experience a life event that is life-threatening, and in that situation we won’t be able to let our spouse, children, or loved ones know whether or not we want to be resuscitated, if we’d only prefer to be medicated under some circumstances, etc.
People really struggle with these concepts, and I understand why. Death is scary, as is a life-threatening accident or health event. What’s even scarier for many people is the idea of losing control over their life and their wealth – two things they’ve spent a long time growing, building, and using in a way that aligns with their values. But that’s the beauty of estate planning – it helps you to create a strategy for your wealth and your life even if you’re no longer able to tell people how you’d like those things handled.
What Do You Need to Have?
Creating an estate plan sounds intimidating, which is why so many people never get around to putting one together. Luckily, it’s much easier than the majority of people make it out to be. To put together an estate plan, you need the following documents:
- A Will
- Power of Attorney for Property (POAP)
- Power of Attorney for Healthcare (POAHC)
- Updated beneficiaries
- Guardianship designations (if applicable)
It really is as easy as that. Let’s break down each of those documents and why they’re important.
Your will outlines what happens to all of your assets when you pass away. This is also where you can set up large donations to charities and causes you care about after you die.
Power of Attorney for Property (POAP)
A power of attorney is a legal document that gives someone else the ability to make decisions on your behalf. Made active through the POAP, these decisions are typically financial (think: paying your bills if you’re in the hospital, selling your property if you’re incapacitated and will require home health care after an accident).
Power of Attorney for Health Care (POAHC)
When you’re incapacitated, you need someone who’s able to make your health-related decisions for you. This is where the infamous “directive” comes into play. In other words, you get to decide what happens to you in the event of an emergency. Your healthcare power of attorney is there to help execute those decisions in your name.
Luckily for you, this one is easy to check off your list! Going through your various accounts and insurances to make sure your beneficiaries are updated is easy, and something you can do on your own in an afternoon.
Usually held as a directive inside of a will, guardians can be designated for minor children. Many pre-retirees don’t think this applies to them because their children are adults with thriving families of their own. However, this isn’t necessarily the case! Even putting a plan together for your pets is important.
Do You Need to Talk to a Professional?
A lot of people handle all or some of their estate planning on their own through a service like Nolo or Legal Zoom. However, I usually recommend speaking with a professional as you get closer to retirement. You want to ensure that your estate plan is all-encompassing, and that you check all of the boxes to ensure that your wealth is used in a way that creates the legacy you want to leave behind. In some states, there are nuances that need to be taken care of through legal documents, and a form-template from an online service won’t cut it.
Speaking with a fee-only financial planner is an excellent place to start as they can help you organize your finances, solidify what goals you have for your wealth after you pass away, and get started with checking your beneficiaries and getting organized. However, even more important than speaking with a financial planner is to speak with an estate planning attorney. Estate planning attorneys specialize in creating and executing the legal documents you need to protect yourself, your assets, and your values. They can even help to facilitate conversations with family members or organizations you want to have involved in your estate plan.
Need a recommendation?
Reach out to me! I’d love to introduce you to some of the outstanding estate planners I know so that you can get this process started.