Forbes' article, "Prince and Estate Planning: What We Can Learn from the Late Musician's Financial Picture," reminds us that you don't have to be a millionaire to create an estate plan. Putting even a simple estate plan into place will save your loved ones stress and headaches when you pass away—no matter how large your assets are.
Here are the six key documents you should have to protect your assets and your family in the event of your passing:
- Beneficiary Forms. This indicates who gets the assets in your 401(k)s, IRAs, life insurance policies, pensions, and other financial accounts upon your death. These designations take priority over the directives in your will, so keep them up to date.
- POD and TOD Designation. A payable on death (POD) form typically says who should receive the money in your checking or savings accounts when you pass away. A transfer on death (TOD) form is similar but typically for brokerage accounts. A TOD deed says who takes over the deed to your home after you die.
- Durable Power of Attorney. This important document designates a person to make health care or financial decisions for you if you become incapacitated or unable to make them for yourself.
- Living Will. This is also called an Advance Health Care Directive. It details the way in which you want your doctors to treat you should you become unable to communicate those wishes.
- Will. This outlines how you want your probate assets divided, as well as who should become guardian of any minor children.
- A Living Trust. This document, like a will, says how you want your property and funds distributed and who will take care of your minor children. It also appoints a trustee to carry out specific wishes for your assets. Unlike a will, assets held in a trust don't have to go through probate. A trust can be used to help manage your assets and property while you're still alive.
By securing the help of a qualified estate planning attorney, you will leave a kinder financial legacy for your loved ones than Prince did for his family.
Reference: Forbes (April 29, 2016) "Prince and Estate Planning: What We Can Learn From the Late Musician's Financial Picture"