Estate planning is a critical aspect of planning for your financial future, especially for retirees. The goal of a thorough estate plan is to ensure your assets and personal wishes are handled appropriately after your passing. Ultimately — you want your intentions and reality to align when it comes to leaving a legacy for your loved ones.
This guide will help you understand the four components to get the ball rolling in creating your estate plant: Establishing a will, assigning a power of attorney, determining healthcare directives, and designating beneficiaries.
Establish a Will
Creating a will is a fundamental step in estate planning. While you can draft a will yourself, many people prefer to utilize an attorney. By using the appropriate language, format, and level of detail provided by an attorney, you can reduce the likelihood of disputes and challenges after you pass away. A will is primarily used to communicate your wishes regarding the care of your children and the distribution of your personal belongings. It ensures that your estate is managed according to your desires.
A detailed and well-crafted will can provide peace of mind, knowing that your loved ones will be taken care of and your assets distributed as you wish. It is important to note that a will is subject to probate, a legal process that validates the will and oversees the distribution of assets. Having a thorough will can streamline this process while saving your family time and removing the need to make stressful decisions during an already difficult time.
Assign a Power of Attorney
A Power of Attorney (POA) is a legal document permitting another person to act on your behalf. General Power of Attorney provides a broad array of power and access. Power of Attorney allows the appointed individual to make medical decisions, process financial transactions, and even conduct business matters in some cases.
Later in life, whether you’re in a nursing home or struggle to make decisions for yourself — a Power of Attorney can help you look after your affairs. Keeping bills paid, selling property, and accessing your bank accounts are tasks your POA can conduct with ease.
Whether you become ill, are in an accident, or are simply traveling far from home, having a trusted individual who can transact on your behalf eases stressful or unforeseen circumstances.
Determine Healthcare Directives
Healthcare directives, also known as advance directives, are legal documents outlining your wishes regarding medical care in life and death situations. These directives ensure that your healthcare preferences are known and respected, even if you are unable to communicate them yourself.
Completing your state’s advance healthcare directives form is essential for clear communication with healthcare providers. This document can include your preferences for life-sustaining treatment, resuscitation, and organ donation. By having your wishes in writing, you can reduce the emotional burden on your loved ones during a medical crisis.
Healthcare directives also provide a sense of control over your own medical care. Everyone has personal beliefs and feelings about end-of-life decisions, and these directives allow you to ensure that your wishes are followed. This can bring peace to you and your family during challenging times.
Designate Beneficiaries
Assigning beneficiaries is another task to add to your estate planning to-do list. These designations specify who will receive the proceeds from your life insurance policies, retirement accounts, and other financial assets. Commonly, people name a spouse or child as their beneficiary.
It is important to review and update your beneficiary designations regularly. Life circumstances can change, such as marriage, divorce, or the birth of a child or grandchild, and these changes may impact who you select as a beneficiary. Keeping your designations up to date ensures that your assets are distributed according to your current wishes.
Beneficiary designations can also help bypass the probate process, allowing for a quicker and more efficient transfer of assets to your loved ones.
Creating Momentum in Your Estate Planning
Estate planning is not a one-time event but an ongoing process that requires regular review and updates. As you approach retirement, you can take proactive steps to ensure that your estate plan reflects your current goals. Here are some tips to create momentum in your estate planning:
- Start Early: Begin your estate planning as soon as possible. The earlier you start, the more time you have to make informed decisions and address any potential issues.
- Stay Organized: Keep all your important documents, such as wills, POAs, healthcare directives, and beneficiary designations, in a secure and easily accessible place. It’s important to also share the location with someone you trust.
- Review Regularly: Life changes, and so may your estate plan. Review your plan regularly and update it as needed to reflect changes.
The Benefits of Partnering with a Professional
While it is possible to handle some aspects of estate planning on your own, partnering with a professional offers numerous benefits. Financial advisors and estate planners have the expertise to help you create a plan that aligns with your goals while keeping all of the legalities in check. They can also help you identify strategies to reduce costs and minimize taxes associated with your estate.
Professional assistance can also provide peace of mind. Knowing that your estate plan is thorough and legally sound can reduce stress and allow you to focus on enjoying your retirement. By understanding the basics of wills, POAs, healthcare directives, and beneficiary designations, you’ve taken a proactive step towards creating a comprehensive estate plan.
About Foundation Wealth Management
Foundation Wealth Management is a CPA-led organization, that provides financial planning services and tax planning support; services and outcomes vary based on each client’s circumstances. Our team includes qualified professionals, such as CPAs and CFP®s, who are integral to our service offerings. Our team includes 3 Certified Financial Planners: Burt Hutchinson, CPA, CFP®, Paul LaViola, CFP®, and Stephen McDade, CFP®.
As Fee-Only planners, we are compensated directly by clients rather than through commissions from brokerage or insurance products, which we believe helps align our services with client goals.
Disclosure Statement:
This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax, or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice. All investments are subject to risk, including the possible loss of principal.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, Past performance is not a guarantee of future results.
