As the years pass, it becomes more important to make sure our affairs are in order - especially in the Covid era we now live in.
That's where an estate plan comes in.
But, what does an an estate plan look like, and what should be included?
An estate plan provides for how your assets are handled should you pass away. It also includes documents that determine who can make medical and financial decisions if you become incapacitated.
The Basics
Many people think that estate planning means just having a will. While a will is a good start and necessary, other documents should be included in your estate plan as well:
A will (aka - last will and testament) We've all seen movies showing nervous heirs gathered together as the last will and testament is read. The will specifies how you want your estate to be distributed. Besides dividing up your assets, a will also appoints guardianship for minor children. This last item is essential to designate - you don’t want a court determining who your children should live with in the event of your death. If your estate includes a revocable trust, a will is still needed. Called a “pour-over will,” the goal of this document is to cover any assets that may have not made it over to the trust.1
An advanced medical directive (medical power of attorney) establishes who can make medical decisions for you should you become unable to do so. A medical power of attorney also allows you to designate a conservator should you become mentally incapacitated.1
A living will details to your physicians what type of care you want to receive at the end of your life when you face a terminal illness or are in a vegetative state. Do not resuscitate (DNR) and do not intubate orders are listed here. While a last will and testament is designed to specify your wishes upon your death, a living will determines what happens to you while you’re still alive.1
A financial power of attorney, much like a medical power of attorney, appoints someone to handle your financial affairs should you become unable to do so. There are two different types of financial powers of attorney: a durable power of attorney and a springing power of attorney. A durable power of attorney goes into effect as soon as the documents are signed, whereas a springing power of attorney only goes into effect if you become mentally incapacitated.1
A revocable living trust is a more detailed document that details not just what happens after you’re gone or incapacitated, but what happens while you’re alive too. At its core, a revocable trust is a vehicle to hold your assets; meaning that until assets are moved over, it’s essentially just an empty vessel. If you have a more complicated estate, a revocable living trust can help manage a variety of assets and beneficiaries. As the trustee, you’ll still have control over your assets while they’re in the revocable living trust, and assets held in the trust will avoid probate after your death.1,2
Estate plans are a necessary part of life, albeit one that no one really wants to think about. But having an estate plan is one of the kindest things you can do for your loved ones.
You’ll gain peace of mind knowing that your family is taken care of, no matter what life throws at you.
John Piershale, CFP®, AEP®
John Piershale Wealth Management, LLC is an Investment Adviser registered with the State of IL and in other jurisdictions where exempt from registration. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned.
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