This is a guest post from Jonathan over at Master Your Card, where he discusses making your credit card work for you rather than them. Be sure to check out his site!
Why do you need an estate plan? If you were to keel over dead right now, how would your assets get allocated? Who would take care of your kids? Where would the dog go? Who would inherit all the money you stashed away for the retirement you’ll never enjoy?
An estate plan is about much more than just having a life insurance policy, although that is certainly an important facet of any person’s total financial health. It’s also about more than just drawing up a will and keeping it in a safe place.
So what is a good estate plan? A solid estate plan should include:
1. A will. This document explains where you want your assets to go after you die. You can also use a will to declare a guardian for your children upon your death.
2. A power of attorney. A power of attorney gives someone else the ability to handle your financial affairs for you if you aren’t able to. For example, if you are incapacitated you’ll need someone to take care of your bills and other financial affairs. Financial institutions won’t allow anyone to waltz in and demand access to your accounts, but if you have a power of attorney in place then the person you entrust with the responsibility will be able to act on your behalf. Beware, though: Only grant a power of attorney to someone who you fully trust and is responsible unless you want to wake up from your coma to find that your fortune was lost in Vegas.
3. A living will. A living will states what you want to happen if you wind up so ill that you can’t tell people your wishes with regards to resuscitating you or keeping you on life support. Some people don’t like the idea of being kept alive if their bodies aren’t able to sustain life without assistance, but if they don’t draft a living will that outlines their wishes then loved ones and medical staff won’t know what to do when the time comes to make a decision.
An estate plan eliminates the guess work. Nobody will have to wonder what you would have wanted because you will already have everything mapped out. Make your estate plan as meticulous as you can in order to make sure that your wishes are met and there is absolutely no confusion with regards to your final wishes.
Set up your estate plan with the help of a competent and experienced attorney. This is important because if your estate plan isn’t written correctly or isn’t notarized by someone then it may be deemed legally insufficient. This may result in your loved ones having to deal with a bunch of issues they wouldn’t have to deal with if your estate planning was completed by someone who knew the correct legal steps to take.
Yes, it costs money to hire an attorney to help you with estate planning. On the other hand, do you really want to throw caution to the wind when it comes to the assets your loved ones will inherit upon your death? Give them a break. After all, they’re still grieving from losing you.