Less than 60% of Americans poised to retire have prepared a Will and other estate-planning documents. Some may put it off because it seems time consuming while others find it a bit morbid. However, when you understand the basic components of an estate plan and the value of each, you may feel differently.
Last Will & Testament
Your Will is the most important document in your estate plan. Without one, the court will decide how, and to whom, your assets will be divided, based on the laws of your state. The advantages of preparing your Will include:
- Your assets are distributed the way you want.
- If you have young children, you choose their guardian – not the family court.
- Your pets are taken care of when you’re no longer around.
- You can appoint someone you trust to be your executor and carry out your wishes.
Keep in mind – a Will only covers property subject to probate. Assets that fall outside of probate are those that require naming a beneficiary such as your FERS pension, TSP balance and life insurance.
“It can also be used to manage your estate before you pass on because the trust owns your assets and you can name yourself as trustee.”
A Living Trust
Though there are many types of legal trusts, a valid Living Trust helps your family avoid probate court and can facilitate a faster distribution of your assets to your heirs. It can also be used to manage your estate before you pass on because the trust owns your assets and you can name yourself as trustee.
Durable Power of Attorney (DPOA)
A Durable Power of Attorney remains in effect if you become incapacitated or unable to make decisions for yourself. With a comprehensive DPOA, you can select an agent and direct them to make specific decisions about your property, finances, investments, paying your bills, and signing documents on your behalf.
Advance Health Care Directives
When a medical crisis leaves you incapacitated and unable to make decisions for yourself, advance healthcare directives help ensure your preferences are respected. It’s important to check which documents your state law requires:
- A Living Will describes your preferences for healthcare treatment.
- Durable Power of Attorney for Health Care names the person you’ve chosen to make health care decisions for you. Also known as Medical Power of Attorney, Health Care Power of Attorney, Designation of Health Care Surrogate, or Health Care Proxy.
- Advance Directive combines a Living Will and Power of Attorney for Healthcare.
To ensure you have the documents you need for a comprehensive estate plan, connect with an FRC® trained advisor who can help get you started.
