No one likes to talk about dying or being seriously sick. However, not planning for these unpleasant realities will make them more stressful and costly, says the article “Death and illness aren’t fun to talk about. Ignoring them costs more” from Reuters. Protecting yourself and loved ones takes just four key documents and a will.
Every adult, no matter their age or level of wealth, needs these key documents: a power of attorney, a healthcare proxy, an advance medical directive and a HIPAA release form. These documents and a will cover the basics for incapacity, when you can’t express your wishes, and the will takes care of the distribution of assets after death.
Why don’t people have these documents prepared? In addition to being hard to contemplate, they are concerned about the expense. However, without these documents, family members may face financial hardship when they have to go to court for authorization to be involved in medical decisions.
Naming people to serve as power of attorney and healthcare proxy roles is an important decision. They don’t have to be the same person. Someone who is great with finances should be the POA, while a person who is good in a crisis and respects your wishes may be the better choice for a healthcare proxy. The healthcare proxy should also live nearby and be hands-on if you need help with medications or getting to doctor appointments.
Beneficiary designations are an often-neglected part of an estate plan. Any asset with a beneficiary designation, usually an investment account, pension, insurance policy, or IRA, goes directly to the person named in the document. This designation overrides any language in the will.
Trusts are a common estate planning tool. A revocable trust is flexible and can be funded with any assets. The person who creates the trust, called the grantor, retains control, can serve as trustee and may make any changes they wish while they are living and have capacity. If they become incapacitated, the successor trustee can seamlessly take over and manage the trust assets.
The revocable trust can become an irrevocable trust upon death, known as a testamentary trust. Placing assets in a trust avoids probate, which can help heirs receive inheritances faster.
Estate planning documents need to be reviewed every three to five years. Even if your life doesn’t change, tax laws change and something that worked well five years ago may no longer serve your wishes. If you have major financial changes, new children, marriages, divorces, or deaths, you need to review and update your estate plan.
Talk with an estate planning attorney in your area, who will help evaluate your estate and help create an estate plan to protect you and your family during life and after death.
Legacy One Law Firm, APLC is an estate planning and probate administration law firm in Los Angeles, California, serving families throughout the State. We help individuals and families establish living trusts, wills, powers of attorney, advance healthcare directives, and other essential estate planning documents designed to protect their loved ones and preserve their legacy. Schedule a quick and easy consultation with estate planning attorney Sedric E. Collins, Esq., or call 323-900-5450.
