Many people come into our office wanting to know what planning they need. We often are able to demonstrate very quickly that it is impossible for someone to know exactly what another person needs, because each person is different, and everybody's goals are different. Although I cannot specifically tell every person what they need without knowing details, there are certainly some basics that everybody should have in place regardless of their age or their wealth.
A Last Will and Testament
A Last Will and Testament will allow an individual to determine where the assets will go upon their death. This document will specifically govern assets that are in the person's name but not jointly owned assets or assets that have a designated beneficiary.
Financial Durable Power of Attorney
This document will allow another individual to make financial decisions for you if you are “unable” to manage your own financial affairs. “Unable” can be because of unconsciousness, being out of the country, or just simply not being able to make those decisions. This will allow your bills to be paid while you are incapacitated, and allow your life to continue on, even if you are not able to make decisions for yourself. The key to this document is having it in place before losing capacity, because the alternative of a guardianship is certainly not a perfect choice.
A Health Care Power of Attorney
A health care power of attorney will allow you to have your medical decisions be made by another individual in the event that you are not able to make them for yourself. If this document has a living will embedded in it, also called an advanced health care directive, that would also allow someone to know what your wishes are at end of life or "end stage medical condition" so that your wishes are carried out in that instance.
The FINANCIAL POWER and Medical Power of Attorney do not have to be the same person or people and often people tend to have them be different because of one person being better with finances and maybe the other being better with medical decisions.
Many people forget about the fact that there are assets and accounts that require the designation of a beneficiary. For example, life insurance, 401(k)s, IRAs, annuities, etc. will allow you to name a beneficiary right on the contract or policy. Whoever you name as the beneficiary will receive those items outright. It is essential that everybody check their beneficiary designations and make sure that it is consistent with your other estate planning. For example, if you name everything to one person in your will but your beneficiary designations name someone else, when you die, everything would be going to who is named as the beneficiary designations, and nothing will be going pursuant to the Will. This is often a case or a situation where people don't understand the implications, and it is imperative that you check your beneficiary designations often to make sure that they are up to date with the rest of your planning.
If you have a child who is under the age of 18, it is important and essential that you name who you want to care for that child in the event that you were to pass. The guardian of your child will physically raise and take care of your child until they reach the age of 18. It is important not only to name that person, but to name a back up, in case something happens to the person initially named. Without naming your preference in the document, it can certainly get ugly, and may lead to a fight in a court room with a judge that is totally unnecessary and avoidable.
If you have these basics taken care of and make sure that everything is consistent with your wishes, your bases will be covered, regardless of your age, health status, or wealth. To the extent that you do have significant wealth or that there are complications to your situation, then certainly there are other estate planning techniques that may be used. But as a basic rule of thumb, these are the essentials that everybody needs, regardless of age and wealth.
If you would like to learn more about the basics or the essentials of estate planning, please give our office a call at (717) 845-5390 to learn more.