Americans Without an Estate Plan
According to various surveys, 2/3 of Americans do not have an estate plan in place.
Estate planning may seem complicated, but it does not have to be. Understanding what it is and what documents are needed to ensure your wishes are carried out is essential. In this article, we will discuss what an estate plan is, as well as a few core documents everyone should have.
What is an Estate Plan?
Estate Planning involves a culmination of documents that are used to direct your wishes before and after death. Essentially, it involves directions outlining how your assets shall be distributed upon your passing, and how you want chosen individuals to handle your health and financial decisions while incapacitated. A few important documents that should be a part of your estate plan are a Last Will and Testament, Power of Attorney, Healthcare Proxy and Living Will.
Last Will and Testament
This is a standard document for most of, if not all, Estate Plans. A will provides instructions on how your property, assets and custody of minor children (if any) should be handled after your passing. You will name an executor, someone trustworthy, to fulfill your wishes and intentions. Including guardianship provisions will be equally important if you have minor children.
Power of Attorney (POA)
This estate document allows you to appoint an agent to act in your place. If you become incapacitated at any point, the agent will be authorized to make financial decisions on your behalf. The POA can come in many forms. A few of the following types you can create are Durable POA, Medical POA, General POA, Limited (Special) POA and Springing POA.
- Durable POA: Allows your agent to continue acting on your behalf when you become incapacitated
- Medical POA: Allows your agent to make medical decisions on your behalf
- General POA: Allows your agent to make both legal and financial decisions
- Limited (Special) POA: Allows your agent to make specific decisions you have allowed for on your behalf
- Springing POA: This one is unique compared to other POA’s. It becomes effective only when a specific event occurs
Health Care Proxy (HCP)
A HCP allows you to designate an agent to make choices about your medical care if you become incapacitated. It can also be referred to as a Medical POA, which was listed above. Additionally, the HCP helps ensure that doctors and other medical professionals follow your wishes or preferences in your Living Will. You can limit your agent’s actions, but generally, they can make decisions about any medical procedures to diagnose and treat your condition.
A living will, also known as an advance directive, specifies the type of medical care you do or do not want if you cannot communicate those wishes. In this, you will spell out your preferences around medical treatment such as pain management or procedures.
The Last Will and Testament is arguably the most important document regarding estate planning. This should be first on your list if you are to do anything. However, it is crucial to designate agents who can make decisions on your behalf through POA’s and HCP’s. Don’t wait until the worst-case scenario happens. Make estate planning a priority!
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