- Financial Planning
Estate planning is an area of our Finances that is probably the least exciting, and often the most over looked.
Here are the Four Estate Planning documents you must have.
It’s been reported that each year over a million Americans die without a will. If you have a will, then you get to choose who receives your assets and cash, who becomes a guardian to your children, and who gets to look after your pets. If you want to give half of your money to charity and half to your church (providing your spouse agrees!) then you can specify this in your will. By not having a will, you are letting the state government make these decisions for you.
Many people believe that if they have no kids and are married, then all of their assets go to your spouse. Not necessarily. Dying “intestate” (without executing a valid will) means that your estate will be distributed according to state law so your spouse may have to split your assets with your parents. The only way to prevent this confusion is to have an executed will.
Wills are cheap and some are available online, although I would recommend seeing an Estate Planning attorney to ensure that you have all bases covered.
A Living Will
You need to have one of these in place should the worst happen to you. For example, you are in a car accident and, as a result of your injuries, you are left in a vegetative state. A provision in your living will will state whether or not you want to be kept alive by a respirator. If you express that you do not, then the hospital legally cannot keep you alive by the use of one. Once the doctor comes to the conclusion that you will not recover from your illness, your living will comes into effect and the doctors follow the choices you made when executing the document.
There are many advantages to executing this document – upon your injury/diagnosis, your spouse does not have to make tough decisions in a time where they are not in the right state of mind to make them; there are no family arguments pertaining to what care you should receive, and you control what happens to you even though you are not able to in the moment.
Power of Attorney for Health Care (POAHC)
This is like a living will but it is used before a living will would come into effect. Should you have a heart attack and fall unconscious, or suffer a blow to the head and not be able to talk, your “agent” (person you designate in the document to make the decisions for you) will then have the power to decide what treatment you should have. For this document to become effective, your injury/illness needs to be one where you cannot specify the treatment you desire, but it cannot be an injury/illness that has been determined by a doctor will not get better.
It’s important to discuss this document with your assigned agent so they know what treatment you would like in certain situations. For example, let them know if you do not want a blood transfusion or if you do not want to receive other people’s organs in surgery. Chances are you won’t have an opportunity to tell your doctor when the time comes.
Power of Attorney for Property (POAP)
Like the POAHC, this one pertains to any type of property you own. Should you fall unconscious and need to sell some assets to pay for medical bills, your assigned agent has the power to do that now that you are incapacitated. They also have the power to refinance your house, sell all of your stocks for cash, and buy you the best nurse money can buy – providing all these things are done for your good.
Another document that is sometimes mentioned with these documents, and a lot of times sold to people, is a Living Trust. Not all people need these, unlike the above-mentioned documents, so be sure to discuss the pros and cons with a reputable Estate Planning attorney to see if you need one of these documents.