Is Estate Planning One of Your New Year's Resolutions? Nine Questions to Get You Started
People often ring in the New Year with lofty goals, whether to lose 10 pounds or write the Great American Novel. Making a last will and testament and other estate planning documents is usually at the top of the list. How can you get started and get estate planning off your to-do list?
First, understand what estate planning does and how it helps you and your family. Estate planning is a way to protect you and your loved ones during your lifetime and after your death. You are in control of who is in charge and what happens if you are incapacitated or die. Not expressing your wishes in legal documents can lead to conflicts with family members, keep your estate tied up in probate court, and cost time and money.
Essentially, there are nine questions you must answer to formulate your estate plan.
1. Who do you want to make financial decisions on your behalf if you are unable to do so?
If you are incapacitated and can't manage your financial affairs, who would you like to help you? You should choose someone you trust as your agent to access your bank accounts and pay bills.
2. Who do you want to make medical decisions on your behalf if you are unable to do so?
If you are in a coma or have a medical condition where you cannot communicate, who do you want as your healthcare proxy to speak with your doctors and make healthcare decisions on your behalf?
3. Do you have wishes for your end-of-life care?
Although difficult to think about, it is worse to leave these decisions to your loved ones. If you have a terminal condition or end-state illness, do you have wishes about what life-prolonging measures you want to take?
4. What are your assets?
You should know what property you own and how it is titled. If you have bank accounts, investments, retirement accounts or IRAs, and life insurance policies, you should make sure you have beneficiary designations for those payable-on-death accounts. They transfer by who you name when creating these documents, not your will, so make sure to keep those up to date.
5. Who are your beneficiaries?
You may think your property and assets go to certain family members, but if you don't name beneficiaries in your will, state laws may dictate the distribution differently. Know who you want to inherit your property. And if your beneficiaries are minors, you can arrange to have money held for them in trust.
6. Who do you want to care for your child(ren)?
If you have minor children and you die, they may need a guardian. It is a difficult decision to name a guardian, but one for you to make and not a probate court who doesn't know your children and family dynamic.
7. Who do you want to care for your pet(s)?
The law considers your pet property and not a beneficiary, so you must think of who you want to give your pet to and if you want to leave money for your pet's care.
8. Who do you want to manage your estate?
You want to decide who will be responsible for handling your estate and following the terms of your will. This person is called a personal representative or executor.
9. Do you need life insurance or long-term care insurance?
If you have young children or dependents, consider term life insurance policies to provide for them if you die prematurely. You may also look into long-term care insurance to cover the significant expenses of nursing homes and end-of-life care.
The Next Step
If you can answer these nine questions, you are close to getting your estate planning done. Now, all you have to do is get it in writing. You need three basic documents: a financial power of attorney, a healthcare directive, and a will.
- A power of attorney is a document that allows you to name someone you trust, your agent, to handle your financial life. You decide what powers to grant your agent and when the power of attorney is effective. A durable power of attorney means that your agent continues to act on your behalf even if you are incapacitated.
- A healthcare directive combines a healthcare power of attorney and a living will or advance medical directive. Within a healthcare directive, you name someone to make medical decisions on your behalf, and you can specify what life-prolonging measures you want taken if you have an end-stage illness or terminal condition.
- A will is a legal document where you leave instructions for your estate's administration. In your will, you can name a personal representative or executor to handle your will, list your beneficiaries and what property they will inherit, and name guardians for your children and caregivers for your pets.
If You Already Have Your Estate Planning Done
Even if you have a complete estate plan, now is a great time to review your situation and see if you need to update your will and estate planning documents. As your life changes, your decisions may as well. Especially if you want to change one or more of the following:
- Personal Representative of your estate
- Guardian of your child(ren)
- Caregiver for your pet(s)
- Beneficiaries of your property and assets
- Financial Power of Attorney Agent
- Healthcare Proxy
- End-of-Life Decisions
Although estate planning New Year's resolutions are important, it is not as time-consuming as you think. And it is easier than losing 10 pounds. You and your family will have peace of mind knowing your decisions are in place when life events such as incapacity or death occur in the future.
- Five Reasons Why Everyone Needs an Estate Plan (FindLaw's Law and Daily Life)
- Simple Guide to Estate Planning (FindLaw Legal Forms and Services Resources)
- Estate Planning Checklist: The Step-by-Step Process (FindLaw Legal Forms and Services Resources)
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.