A lot of things get lumped under the broad title of estate planning. Not only are you arranging the financial aspects of your estate, but you’re letting everyone know your intentions regarding healthcare and any other wishes you may have. This process is exactly the same before and after retirement; the only difference is that it grows increasingly important to make your wishes known as you get older. Estate planning can be massively complex, or it can be incredibly simple. And, for most people, it’s pretty straightforward.
You want to cover these four areas:
- Your Will
- Your Health Care Directives
- Your Financial Power of Attorney
- Ensure all of your beneficiary designations are in order
Creating your Will
When most people think of estate planning, they think of a will. This is the central document of your estate plan, and it does a lot of the heavy lifting in making sure your wishes are known. Your will is generally where you say where you want your assets to go, who will be in charge of making that happen, and, if you still have minor children, who should be their guardian. If you don’t have a will when you pass away, the state gets to decide what happens to everything you owned. They might do what you would have wanted, but they also might not.
Thankfully, creating your will is simple. You just need to record your wishes, and make sure the document is witnessed. You don’t even need to have it notarized, though it’s a good idea. Sample wills are available online, but many people choose to talk through the process with an estate attorney. Different states have different rules, and you want to confirm everything is going to be handled correctly. It will already be a difficult time for those you’ve left behind, and you don’t want to make it even more difficult by leaving them in a fight with the courts.
Setting Up Your Health Care Directives
While your will takes care of your finances after you pass, it doesn’t come into effect until after your death, so you can’t use it to tell people your wishes regarding your health care. For that, you need a living will, otherwise known as an advanced directive. It tells your family and doctors your wishes if you’re unable to communicate them yourself.
You should also designate a medical power of attorney for health care decisions. This simply means you choose the person you trust to make medical decisions for you if you’re not capable of doing so. While you may be able to deal with the big picture items in your living will, you can’t predict all of the issues that might come into play. Giving someone the power of attorney over your health care decisions allows them to exercise their best judgement, and lets them make decisions based on what they think you would want. It’s generally a good idea to have a frank conversation with this person so they know your wishes.
In line with this, it’s also generally a good idea to sign HIPAA releases to allow this person, or potentially multiple people, the right to access your medical information when you are incapacitated. Because of medical privacy laws, doctors and hospitals are often not allowed to release your medical information, even when it would be in your best interest to do so. Taking care of these releases in advance means the people who are going to be making medical decisions for you will have the information they need.
Setting Up Financial Power of Attorney
Just like your medical power of attorney gives someone power over your health care decisions, designating someone your financial power of attorney will allow them to make financial decisions for you in case you are unable to make those decisions yourself. It’s a good idea to separate the documents granting medical and financial powers of attorney because it will keep things simpler. While you may name the same person in both documents, the people they will be working with don’t need all of the details on the other areas of your life. Your doctors don’t need to know about your finances, and your bank doesn’t need to know about your medical wishes.
If you do decide to name different people as your medical and financial powers of attorney, make sure they work well together. Oftentimes when these documents are activated, big decisions need to be made quickly, so you want to make sure everyone knows each other, and most importantly knows what you would have wanted.
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