Estate planning (planning for what happens to your assets when you die) is probably the spookiest part of any financial plan. This Halloween is the perfect time to face your fears and get educated on why this is such an important part of everyone’s plan.
No one likes to think about their own demise, but let’s face it – there is a 100% chance that we are going to die at some point. We all plan for long and healthy lives, but we don’t get to choose how much sand is in our proverbial hourglass.
If the odds of dying are 100%, why do so many people choose to die without a plan?
In my experience, people either do not want to think about the prospect of dying or they are generally not educated on what is involved with estate planning, so they tend to procrastinate. People seem to be more prepared for the highly unlikely event of a zombie apocalypse than for the 100% certain event of their death.
Here is a list of some of the basic parts of an estate plan and what you need to consider before you meet with an attorney to get your plan in place:
Will
The main purpose of a Will is to distribute property after your death. If you do not have a Will, then disbursements will be decided according to state law – which may not be the ideal situation for your loved ones. In your Will, you name who is in charge of executing your wishes if you are gone (typically, you would name a spouse if you are married, then choose an alternate to fill the role if the first person you choose is unavailable.
If you have children or others that depend on you for care, your Will is where you name a guardian for these individuals. You name a physical guardian (whom, the dependents would live with) as well as a financial guardian (who manages the money you leave for them). They can be the same person (or couple), but don’t have to be. Often, you may like someone’s parenting style, but not necessarily their money management skills. You name your first choice, then also name a successor (or several) in case the first choice is unavailable.
Trust
A trust is a legal entity created by a party (the grantor) through which a second party (the trustee) holds the right to manage assets and property for a third party (the beneficiary). Trusts offer more control over assets, but are also more tedious to set up, more expensive than just having a will, and require more ongoing management.
Healthcare Power of Attorney
This is where you nominate who can talk with the doctors on your behalf if you are incapacitated (or in a zombie-like state). You would typically choose one person to be in charge and nominate a successor if that person is not available.
Living Will/Advanced Medical Directive
This is the “when to pull the plug document.” You can specify any religious wishes/beliefs for the doctors to follow and decide when you no longer want life-sustaining measures taken if your demise is imminent.
Durable Power of Attorney (Financial)
A Durable Power of Attorney allows you to authorize someone to act on your behalf to do things like pay your bills, file your taxes, and supervise your investments if you are unable to do so. You can make this authorization effective immediately or effective upon a certain event.
It is generally a good idea to notify the people that you have nominated to serve in these roles, so that they aren’t taken by surprise and can ask you questions about your preferences BEFORE something happens to you.
Don’t be “Scared” of Estate Planning
Cast your fears aside this Halloween and do your loved ones a favor by putting a plan in place to care for them if you are no longer around (or turn into a zombie).
Jamie Bosse, CFP®, RFC, CCFC is a lead financial planner with Aspyre Wealth Partners®. You can schedule a free consultation with Jamie by clicking this calendar link: https://go.oncehub.com/JamieBosse
Jamie A. Bosse is a Certified Financial Planner® professional at Aspyre Wealth Partners® and a board member of the Financial Planning Association of Greater Kansas City. For help with your specific situation contact Jamie at jbosse@aspyrewealth.com
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