The Sooner You Take These End-of-Life Considerations into Account, the Better
No one really wants to prepare for their own death. But planning for your estate is an important aspect of your financial strategy. The sooner you have the basic documents in order, the better for your family’s financial future. The following are basic estate planning documents you may want to include in your package.
Your Will dictates who will receive your assets when you die and under what conditions. If you have minor children, you can name guardians for them in your Will. You can also name an executor or personal representative to carry out the instructions in your Will and trustees to manage trusts created under your Will.
A funded revocable trust can be created to ensure a trustee of your choosing can act on your behalf in case you become incapacitated during your lifetime. A revocable trust also allows you to avoid probate, because the assets are transferred to the trust before your death.
Power of Attorney
A power of attorney gives your attorney-in-fact (the person you name) the authority to act and sign documents on your behalf. Your attorney-in-fact may need to act for you if you become incapacitated or if you are traveling and unavailable to act for yourself. You may want to have a revocable trust in place for investment management purposes and a power of attorney for other purposes, including handling assets not transferred to the trust.
Health Care Power of Attorney
Also known as a health care proxy, a health care power of attorney gives someone you select the power to make healthcare decisions for you if you are unable to do so. For example, if you were in a coma, your health care proxy (the person named in your health care power of attorney) could make decisions for you regarding the treatment options presented by your doctors.
This document is designed to clearly state your wishes with respect to your treatment in specific health situations to your medical providers and your health care proxy. Depending on your wishes, it may include a do-not-resuscitate (DNR) order. This is a directive to hospital staff and health care professionals not to perform cardiopulmonary resuscitation (CPR) if your heart stops or you stop breathing.
Irrevocable Life Insurance Trust
The purpose of an irrevocable life insurance trust is to receive and hold life insurance proceeds. It allows these funds to be available to your beneficiaries without being included in the taxable estates of either you or your spouse. An irrevocable life insurance trust can be particularly helpful if your surviving family members need money soon after your death for living expenses or to pay estate taxes.
Life Insurance Policy
Of course, you also need a life insurance policy to provide the death benefits that go into your irrevocable life insurance trust. Buying life insurance is a good way to make sure your family is provided for after your death. There are many different life insurance options. If you do not currently have a policy or want more life insurance coverage, our knowledgeable agent can help.