By Adam Freeland
Special to The Dagger
Who will take care of the kids if the unthinkable occurs? Who can you trust to manage your finances if you are in an accident or incapacitated by age or illness? How do you make sure your loved ones are provided for? How can you be sure your family isn’t arguing over your possessions?
My wife, Donna, and I confronted these questions as we married, had our children, and watched the aging process of beloved family members. We were repeatedly advised to develop a solid estate plan with a probate attorney to resolve our fears. To be honest, we avoided taking action. We didn’t really understand “an estate plan,” we didn’t want to face the questions, and, well, we were busy. Finally, we acknowledged that bad things do happen to good people and not having a plan was a worse alternative than facing the questions involved in estate planning. The clincher for me was when I realized that if I did NOT have a plan, State Government statutes would determine decisions about my family and assets with NO input from me! As a result, we sought the advice of a team of family law professionals who are experienced in practicing family law (estate planning attorney, accountant, and financial planner).
Three Components of Basic Estate Plan
Most people think of wills when they think of estate planning but an estate plan is a formalized and written plan to address your needs, your family’s needs, and how your financial and other assets are administered should you pass on or be incapacitated. An experienced estate planning attorney can handle this for you.
A will is only one of the three parts to a basic estate plan – a will outlines what will happen after you die. The other two parts of an estate plan deal with issues that may arise while you are living.
A basic estate plan contains three parts:
1. WILL – The main components of a will include: (1) who will represent you through your will and administrate your will according to your directions, (2) who you want to be the guardian of minor children, (3) who will manage assets left to minor children, (4) recipients of your various assets. Keep in mind that named beneficiaries on accounts like 401k’s, life insurance, and pension supersede who you name in your will. You can look for a will attorney to help you on this matter.
2. DURABLE POWER OF ATTORNEY – Names who will manage your finances, pay bills, and work with your attorney if physical or mental conditions make it impossible for you to conduct your own business.
3. ADVANCED MEDICAL DIRECTIVE – The two main components of an Advanced Medical Directive are: (1) Health Care Power of Attorney – specifies who can talk with your physicians and can make decisions on your behalf. (2) Living Will–specifies your wishes under specific medical conditions.
Donna and I took steps to protect our family and our wishes. Here are the steps you can take to developing your estate plan:
1. Decide to take action.
2. Find a good estate litigation lawyer who specializes in estate planning to discuss your own situation. Be cautious about planning on your own and following generic directions. Each state has its own laws.
3. Follow through until you have a signed legal document in place. Answer all the questions the professionals ask. (It required many tough, heartfelt conversations for Donna and me to reach our decisions.)
4. Communicate! Communicate! Communicate! Everyone named in your estate plan should know your wishes, where you keep documentation, and the name of your lawyer.
5. Review and update your estate plan every several years or as your circumstances change. Be especially aware of changing circumstances; for example marriage, divorce, birth of a child, death of a loved one, a child turning 18. Hop on to this original site and taking the time to complete a formal written estate plan will be well worth it, especially if you are divorced or are going through a divorce with the guidance of a divorce attorney. Knowing you and your family are protected gives a sense of confidence and contentment.
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor.
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Harford Financial Group and Cambridge are not affiliated.
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Discuss this topic live with Adam Freeland and Maynard Edwards at 7 a.m. Wednesday on WAMD 970 AM.