Estate Planning: One Document At A Time

Meet Linda. Linda wants to ensure that her family is financially taken care of no matter what happens to her. She has a husband and two children to take care of. During these uncertain times, Linda knows that estate planning is a necessity. She’s also wise enough to take her time preparing. That way, she can make sure everything is done properly.

Coming up with a financial checklist is easy. But actually following through can be a bit harder. So, let’s see how Linda should prepare to make sure her family is accounted for in case of an emergency or tragedy.

Giving Durable Power Of Attorney

A durable financial power of attorney is a legal contract. It allows you to appoint someone to take over your finances in case you are incapacitated and unable to make financial decisions.

If Linda is for any reason unable to handle her finances, she’ll need to have someone else manage them on her behalf. For that, she’ll need to give a trusted person or a loved one a durable financial power of attorney.

You can give financial power of attorney to ensure that your money will be used to support your family. The person you grant it to (your “attorney-in-fact”) will be able to make financial decisions on your behalf. But the power can only be given to someone 18 years old or older. The other requirements are as follows:

  • The person signing the document must be mentally competent
  • In most states, the document must be signed by a third party unrelated to you

Advanced Healthcare Directives

If you’re ever incapacitated and in need of life support, your advanced healthcare directives will determine what happens next. An advanced directive for healthcare is a complete set of legal documents. There are two parts to it:

  • A living will
  • A durable healthcare power of attorney

Should Linda find herself in this position, someone may have to make some hard decisions on her behalf. That brings her to her first document: her living will.

Living Will

A living will is a will specifically for your healthcare wishes should you become incapacitated and need life support. You will have to fill out a form directing physicians in case you find yourself in that position.

A Durable Healthcare Power Of Attorney

Next, you need to list a durable healthcare power of attorney. This would be an individual close to you who you permit to execute your healthcare wishes for you when you’re unable to do so.

Make sure you download the current forms from your state’s government website. Advanced healthcare directive forms vary by state.

As long as Linda has the right form, she can fill out her directives. She will need a witness, but the forms are easy to fill out.

Titling Correctly

There are three assets that you should confirm are appropriately titled:

  1. Homes
  2. Investment accounts
  3. Vehicles

Homes

A home’s title describes the rights that dictate who has the legal and equitable interest in it. To ensure that both Linda and her husband will retain ownership of their property should one of them pass, they should buy their home under joint tenancy with rights of survivorship. If the home is titled that way, there may not be a need for Linda to retitle.

If your home isn’t titled appropriately, don’t worry! You can always retitle.

Re-titling a home requires you to change the title on the deed. To do this, you will need to record a new deed with the county recorder’s office.

Investment Accounts

Similarly, you can retitle your investment accounts with your bank. To do so, you’ll need:

  • Your date of birth
  • Social security
  • Contact information

Making sure your investment accounts are titled properly will ensure your loved ones are accounted for.

Vehicles

Lastly, vehicles can be retitled. But first, you’ll need to have the loan paid off. Contact your lender if you need proof that you’ve paid it off in full. You’ll need to go to the DMV to retitle your vehicle.

If Your Assets Are Titled As Intended, You Might Potentially Not Need A Will

If the house you live in was titled or owned as community property with rights of survivorship, it is passed directly to your spouse upon your death. Note: community property title is available only in a few states. In others, joint tenants with rights of survivorship may be used to pass assets to the surviving spouseCheck your state laws to be sure:

  • Your investment accounts are also titled as community property with rights of survivorship so the assets pass to your spouse directly
  • The beneficiary of your life insurance is your spouse so insurance payout passes to them outright
  • Your spouse was also the named beneficiary of your 401K and IRA accounts so these accounts also pass outright to them

Beneficiary Designation

A designated beneficiary inherits the payout of a life insurance policy or retirement account. These accounts are special because they are not controlled by the terms of your revocable trust or your will. They are controlled directly by the beneficiary designation on each account.

To make sure your payouts go to the right place, make sure you’ve listed the right beneficiary on:

  • Life insurance policies
  • Retirement accounts like your 401(K)

Getting A Will

A will allows you to decide where and how your assets are transferred upon your death.

Wills can include many stipulations, but they need to be written properly to be effective. These stipulations can include critically important factors like who will be the guardian of your children if you are a single parent.

A lawyer can help you make sure that your property is transferred exactly the way you want it to be. These services aren’t hard to find, and there are likely reputable professionals near you. The best option is always to consult an estate planning lawyer.

Knowing these things, Linda again asked her estate planning lawyer to make sure she had all her needs looked after. She could finally relax knowing that her loved ones’ most pressing needs were taken care of. 

Conclusions

Preparation for the worst is a sad but necessary job. So, it’s always best to be like Linda and plan ahead so:

  • You can ensure your loved ones receive what you want them to
  • But you should ensure that all your paperwork is filled out properly 
  • You can explain your needs to a lawyer and they can make your needs into reality
  • Make sure you go to a lawyer licensed to practice real estate or estate planning law in your state
  • If you can’t afford to consult a lawyer, you can still use resources like legalzoom.com
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