The Importance of Estate Planning

The issue of estate planning is one that many would rather not think about - especially the young. The assumption is that estate planning is only for the elderly, or those with large or valuable estates. This couldn't be farther from the truth! Good estate planning is a gift that you leave to those you love who will survive you, whether your estate is large or small. Bad estate planning can be more than just a small headache for those you leave behind. As one currently walking through the probate process personally, here's what I'd recommend your plan include:

1. Durable Power of Attorney
Durable Power of Attorney allows the person you appoint to act on your behalf for any financial decisions that may need to be made if you are incapacitated in any way. Without a durable power of attorney, no one can represent you unless the court appoints a conservator or guardian, which can be a cumbersome process.

2. Medical Directive
The medical directive can include a number of other documents, including a health care proxy, a living will, and medical instructions. A health care proxy allows you to designate someone that you know and trust to make health care decisions for you should you become unable to make them for yourself. A living will instructs your family and your health care providers about your wishes regarding life-prolonging medical treatments. A living will only comes into effect in situations where your condition is terminal or you are in a vegetative state.

3. Last Will and Testament
Your will is the document directing who will receive your non-probate property at death, and allows you to name the individual, or “personal representative”, that you would like to administer your estate and distribute it according to your instructions. A good place to store the original of your last will and testament is with your attorney. The naming of a guardian for your young children is arguably one of the most important components of your will. Without a named guardian, your children become a ward of the state if you and your spouse both die. Consider carefully who you'd like to raise your children, and ask them if they are willing before you document this legally.

4. Designated Beneficiaries
A beneficiary is a person that you have named to receive the proceeds from your life insurance policy, retirement accounts, pension, bank account, or any other financial account with either a death benefit or beneficiary designation attached. Proceeds from accounts with a named beneficiary are considered “non-probate” assets, and are distributed directly to the individuals named outside of the estate. If beneficiaries are not named, distribution of proceeds would be governed by the will.

5. Coordinated Account File
A coordinated account file is simply a plan for storing copies of all financial and legal documents and a listing of all personal assets with their approximate values. Also included in this file should be a spreadsheet listing all financial accounts, including institution name, contact info, account number, asset value, and beneficiary if applicable. Keep this file in a safe place in your home, perhaps a fireproof file cabinet or safe, and make sure your designated personal representative is aware of the location. This will simplify matters significantly for your loved ones and beneficiaries upon your death. Also - have a plan to revisit your file periodically to ensure that your documents are current.

Deanna Koffler, Nine36 Financial (936 Financial)