Do you need an estate plan? If you're over age 18, the short answer is yes.
Estate planning isn't just for the wealthy or retirees. It helps ensure that your wishes are carried out if you become unable to make decisions for yourself and allows your assets to be transferred according to your instructions after your death.
In this article, we'll review the most common estate planning documents, what they do, and who should have them in place.
Power of Attorney for Healthcare
A Power of Attorney (POA) for Healthcare is a legal document that names someone to make healthcare decisions on your behalf if you are alive but unable to make those decisions yourself. It also allows a trusted person to communicate with healthcare providers and receive medical information when necessary.
Because of strict HIPAA privacy rules, every adult should have a healthcare POA. This document is especially important for unmarried partners and parents of young adults.
Consider this example: Your 18-year-old child is involved in an accident and requires emergency surgery. You rush to the hospital, but medical staff cannot freely share information with you because your child is legally an adult. If your child has a healthcare POA in place, you can access information and help make important decisions if needed. Without one, you may have limited ability to assist until your child is able to provide consent.
Who should have one?
Anyone age 18 or older.
Power of Attorney for Property
A Power of Attorney for Property allows you to appoint someone to manage financial and property-related matters on your behalf while you are living.
Some powers of attorney become effective immediately, while others take effect only after a triggering event, such as incapacity.
A property POA can be useful in situations where you're unavailable to sign documents or complete a transaction. For example, if you are traveling when a real estate closing takes place, your designated agent may be able to act on your behalf. More importantly, this document can help ensure that your financial affairs continue to be managed if you become incapacitated due to illness or injury.
Who should have one?
Anyone age 18 or older.
Will
A Will is a legal document that directs how certain assets will be distributed after your death. It also names the person responsible for carrying out your wishes (the executor) and allows you to designate guardians for minor children.
Assets held solely in your individual name generally pass according to the instructions in your will. However, some assets—including retirement accounts, life insurance policies, and accounts with a Transfer on Death (TOD) designation—pass directly to the beneficiaries named on those accounts, regardless of what your will says.
Depending on your state's laws and the value of your estate, your executor may need to go through probate court to administer and distribute assets.
Who should have one?
- Anyone who wants to determine who inherits their assets rather than relying on state law.
- Anyone with assets that do not have beneficiary designations.
- Anyone with minor children.
Trust
A Trust is a legal arrangement that holds assets and provides instructions for how those assets should be managed and distributed. The person responsible for carrying out those instructions is known as the trustee.
Assets titled in the name of the trust generally pass according to the trust's provisions rather than through probate. This can help simplify the transfer of assets, maintain privacy, and potentially reduce delays for beneficiaries.
Trusts also provide greater flexibility and control. Instead of distributing assets outright, you can establish guidelines for when and how beneficiaries receive funds. This can be especially valuable when beneficiaries are minors, have special needs, struggle with substance abuse, or would benefit from structured distributions.
In addition, trusts allow you to continue influencing how your assets are used after your passing, helping ensure they support the goals and values that are important to you.
Who should consider a trust?
- Individuals who want greater control over how assets are distributed.
- Families seeking a more private and efficient transfer of wealth.
- Parents of minor children.
- Individuals with beneficiaries who may need financial oversight or protection.
- Those whose estates may exceed state probate thresholds.
Final Thoughts
Estate planning is not a one-time event. Your documents should be reviewed periodically and updated following major life events such as marriage, divorce, the birth of a child, the death of a family member, or significant changes in your financial situation.
Having the right estate planning documents in place can provide clarity, protect your loved ones, and help ensure that your wishes are carried out when it matters most.
Need Help Getting Started?
Estate planning can feel overwhelming, but you don't have to navigate it alone. While financial advisors do not provide legal advice, we can help you understand how estate planning fits into your overall financial plan and coordinate with your attorney to ensure your strategy aligns with your goals.
If you'd like to discuss your estate planning needs or review how your current plan fits into your broader financial picture, contact our office today to schedule a conversation.