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Basic estate planning tools

Four Basic Estate Planning Tools

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It was reported on the news recently that some of Aretha Franklin’s family members have found what they believe to be her will. It was handwritten, stained, and crumpled up in a couch. The courts may or may not choose to honor it, depending on whether or not they are able to verify its authenticity.

There are four basic estate planning tools you should have.

For too many families, a family member dies unexpectedly or becomes incapacitated at a young age, and they never did the right planning.  Sometimes worse, they did the right planning, but the documents are decades old, out of step with current laws, and the power of attorney is so old that no financial institution will recognize it.

The problems that these scenarios create for loved ones are stressful, expensive, and take a fair amount of everyone’s time. Solutions are offered in the article “Planning for the unexpected–4 Steps to get your affairs in order” from the Post Independent.

These four basic estate planning tools that will help make the unexpected events of life a little less challenging.

Have a will and other estate planning documents prepared.

A will is a list of instructions to the court that details how you want your possessions to be distributed after you die. It should be drafted by an estate planning attorney who is licensed to practice law in your home state. The will goes through the probate process, which takes care of your legal and financial matters. In some states, the probate process is simple. In others, it can be problematic. Your estate planning attorney will be able to advise you about the probate process in your area.

A revocable living trust is a useful estate planning document that is used to establish more control over your assets while you are alive. It should also be created by an experienced estate planning attorney. At your death, assets held in your trust then pass to heirs and avoid the probate process.

Make sure you title your assets properly.

Once you have a will and any trusts in place, any assets you wish to have placed in the trust need to be titled correctly. If you own a property with someone else and want to be sure your share of that property goes to the other owner, you’ll need to title it jointly.

Don’t forget to review the beneficiary designations that are usually a part of your bank and investment accounts, retirement accounts, and insurance policies. Any beneficiary designation will override the will. If you haven’t reviewed beneficiary designations in a long time, now is the time to do so. There is no way to undo a beneficiary designation once you have died.

Create powers of attorney.

These documents give another person, the “agent,” the power to act on your business, financial, and legal affairs if you are incapacitated. The laws vary from state to state, which is another reason to work with an estate planning attorney licensed in your state. You’ll need these documents:

  • A durable power of attorney
  • A medical durable power of attorney
  • A living will

Prepare a letter of instruction.

This is not a legally binding document, but it can provide loved ones with a great deal of clarity when you have passed. Consider including this information:

  • A list of financial accounts and account numbers and any online usernames and passwords.
  • A list of important documents and where they can be found.
  • The names and contact information for the legal and financial professionals with whom you work.
  • Your final burial and/or funeral wishes.

Once you’re done, review the documents every few years and when there are major events in your life, including births, marriages, divorces, deaths, and other “trigger” events. Remember that the laws change and so do family relationships and circumstances. Don’t let too much time go by without a thorough review of these four estate planning tools.

Reference: Post Independent (July 22, 2019) “Planning for the unexpected–4 Steps to get your affairs in order”