Estate planning is a delicate subject. But whether you’re considering your own legacy or helping an older relative, it’s important to prepare the legal and financial documents that affect your family’s future. Here are some of the essentials.
Advance Health-Care Directive
Also known as a living will, this document describes the kind of life-prolonging measures doctors should take if a major illness leaves you unable to state your wishes. The directive can prevent family members from having to make agonizing decisions about whether to artificially prolong your life.
Power of Attorney
This form will give an appointed friend or family member the power to make decisions on your behalf if necessary. Without it, it’s difficult and expensive to authorize someone else to serve as your proxy, often involving a petition for guardianship, which can cost $10,000 or more to establish.
Life Insurance Policy
Purchasing a life insurance policy will ensure that your beneficiaries will have the cash flow to settle debts and manage ongoing expenses associated with your estate. It may also help them hold on to significant assets that they would otherwise need to sell. Visit the GEICO life insurance page to learn more and get a quote.
When you write a will, you can determine how your property and assets will be divided upon your death and appoint someone as a trustee to carry out your wishes. If you haven’t prepared a will, your estate will be divided according to your state’s intestate succession statutes, which follow set formulas for distributing assets to relatives.
The question is not whether you will have an estate plan but whether you will have an estate plan of your own selection or one imposed upon you by law,” says Scott A. Farber, a financial planner in Miami.
Revocable Living Trust
A revocable living trust lets you put all of your assets into a trust you can manage during your lifetime. You can appoint a family member to maintain it and distribute the assets upon your death or later (for instance, on a child’s 18th birthday). This living trust can substitute for a will and gives you more control over the distribution of your assets after you pass away. Although a trust can be complex to set up, it can offer significant benefits in certain situations, particularly if you have a large estate.
After preparing such documents, let a loved one know where to find them. Keep copies in a safe place, along with other important documents such as property deeds, your birth certificate, Social Security card, etc. Getting your paperwork in order now will give you peace of mind and help build a lasting legacy for your family.
What steps have you taken to plan your estate? Tell us in the comments below.
By Kathryn Hawkins