How Do I Know If I Need an Estate Plan?

If you’ve ever thought that estate planning is only for the ultra-rich or that you can wait until later in life, you’re not alone. But estate planning is important to consider at any age and is a fundamental part of a comprehensive financial plan. And it’s not just about what happens to your stuff when you’re gone!

How can estate planning help me now?
At its core, an estate plan can help address two big concerns: what happens if you can’t make decisions for yourself, and what happens to your assets after death. Let’s look closer at that first one.

According to Kiplinger, every adult should, at a minimum, have two key legal documents: a health care proxy and a durable power of attorney.^[1]

1. A health care proxy lets you appoint someone you trust, such as a spouse, partner, or close friend, to make medical decisions if you’re incapacitated. This should be someone who shares similar views with you and knows you well enough to make choices that you would agree with and would be in your best interest. Choosing someone yourself could be much preferable to a court-appointed health care agent who may not know how you want sensitive health decisions managed.^[1]
2. A durable power of attorney hands off authority to someone you choose to manage your finances when you’re unable to do it yourself. This may include bill paying, tax filing and investments. ^[1] The same questions that drove your choice of healthcare proxy can be helpful. Ultimately, choose someone you trust to be responsible with your finances and carry out your wishes.

Together, these documents aim to help protect your interests and wishes while you’re still alive. They can also help create some peace that, should the worst happen, your trusted loved ones will be able to make decisions about your health and finances that will be both beneficial to you and could help save them money and emotional turmoil.

What else do I need for my estate plan?

A durable power of attorney and health care proxy are great, but here are some other essentials you’ll want to consider:

• A will: This determines who gets what, names guardians for minors, and chooses an executor to fulfill your wishes.^[2],[3]
• Living (revocable) trust: This helps avoid probate, maintains privacy, and offers smoother transitions for your assets.^[3]
• Beneficiary designations: Designations for life insurance, IRAs, Payable-on-Death and Transferable-on-Death accounts make sure what’s in them goes straight to the people you intend.^[2]
• Guardianship designations: If you have kids, this makes your wishes clear in case of your passing.^[2]

How do I know if I really need an estate plan?
Here’s an easy checklist. If any of these apply, it’s time to get started:

• You own assets such as bank accounts, a house, retirement funds or have dependents.
• You want to avoid probate headaches or keep things private.
• You care about how medical decisions are made if you can’t speak for yourself.
• You have life insurance or retirement accounts with beneficiaries.
• You want to ensure someone handles your money responsibly if you’re out of action.

Here’s the thing: even the simplest plan is better than no plan. Starting with a healthcare proxy and a durable power of attorney can be a prudent way to begin. From there, you can expand your strategy as needed. And you don’t have to do it alone! It’s common to feel overwhelmed, so contact us today to team up with a trusted financial advisor for tailored guidance and clarity on how to create your personalized estate plan.