One of the most important aspects of retirement planning is estates, and it’s never too early to get your financial house in order. This will save your loved ones the added time and grief of scrambling around trying to piece together your finances, debts, and wishes after you have passed away. Essentially, estate planning means defining the way in which your assets will be divided up to your survivors upon your death. Once you have completed your estate planning, the choices you’ve made will become legally binding, so you can rest easy knowing that everything will be handled according to your direction after your death. There are three key areas that you must consider when you are planning your estate.
Your Healthcare Proxy
A healthcare proxy is a person that you select to become your “agent” for all healthcare decisions that you cannot make yourself. If you are incapacitated, in a coma, or otherwise unable to speak for yourself, your healthcare proxy has the authority to make the final call in your best interest. This includes decisions regarding whether to use life-sustaining treatments.
Your Power of Attorney
Your Power of Attorney is also known as Durable Power of Attorney (DPOA), and the title authorizes a person to which you grant power to handle all your financial affairs. This means that if you suffer a brain injury, contract a disease like Alzheimer’s, or become incapacitated in some other way, the DPOA that you select has the final say in all your money matters. This includes all real estate you have an interest in, your bank accounts, and all your other assets as well.
Your will controls the distribution of your property upon your death. When you make out a will, you must name important people within it. This includes your Executor, the person you designate to control your estate and divide up your assets. An Executor also has the ability to hire an estate attorney to help with any legal work that may ensue if there are any disputes while settling your estate.
You must also name Devisees in your will. These people will assume ownership of the assets you allocate therein. Oftentimes, these people are not your closest relatives. Your state governs the division of assets in the absence of a will, so make sure to name your Devisees specifically to ensure that your assets will go where you wish after you pass away instead of where the state decides they should go.