6 Considerations for Your Estate Plan

Have you thought about your estate plan? If not, it’s a crucial element of retirement planning because it dictates how you’ll save and plan for the future. And even if you already have an estate plan in place, it can and will adapt and change over time.

In our most recent podcast, we walk you through six things to consider for your estate plan.

If you’re thinking, “I don’t need an estate plan,” you do. In fact, creating an estate plan is something that we recommend for all of our clients because they’ve worked hard during their lives and should have a say as to what happens to their estate when they pass on.

The six things that we recommend you consider for your estate plan are:

6 Considerations for Your Estate Plan

1. Will

Everyone needs a will, but why? A personal story I remember from school is that the #1 thing to do is to have a will. They drilled it into our heads that everyone needs a will. Why?

• Wills dictate who gets what in an estate.
• Wills dictate how assets get into someone else’s name.

In a will, you outline how your heirs will receive your assets and who gets what. If you don’t have a will, the courts will decide who gets what assets and how they receive them. Without a will, your assets may go to someone you don’t want.

Additionally, in 30 minutes or so, we can have most questions answered that populate your will and make your death much easier on your estate. Without a will, you’ll leave a mess for your estate and family that you leave behind.

2. Healthcare Power of Attorney

A power of attorney (POA) is someone who has the power over decisions. A healthcare POA can make decisions on your behalf while you’re alive. The individual steps in to make decisions for you if you’re unable to make them yourself.

For example, if you’re in a coma, this person could dictate your healthcare.

When you create a healthcare power of attorney, you can outline:

• What care you would like
• What care you reject
• How someone can make decisions on your behalf

No one wants to be left with a decision that can impact their loved one’s life. When creating this document, you outline the care you would like and not like. Perhaps you don’t want to be on life support.

If you put in this document that you don’t want to be on life support, you’re saving someone else a lot of heartache because you’ve made the decision yourself.

It’s crucial to remember that a healthcare POA only allows the person to decide if you cannot make the choice for yourself. A stroke or brain damage are just two times when the person given power of attorney can step in and make decisions for you.

Everyone, even if you’re just turning 18, should have a healthcare POA because you just never know what the future holds.

3. Durable Power of Attorney

A durable power of attorney involves decisions outside of healthcare, such as:

• Accessing retirement accounts
• Writing checks for you
• Controlling your finances and assets

The individual is acting in your interest, and you can outline how this individual may act. Perhaps you don’t want them to have the power to take money out of a retirement account.

If you have an IRA, you need to have a durable power of attorney in place. Why? An IRA is an individually held account. Your spouse has no right to access these accounts, even if you have a stroke and cannot access them yourself.

Instead, many IRAs will require you to have a durable power of attorney with them so that they can allow your spouse to access these funds.

4. HIPAA Form

HIPPA forms are for medical purposes, and they augment the healthcare power of attorney. The form allows access to your medical records. If you have a spouse or a child who needs access to your medical information, a HIPPA form is crucial.

Once your child turns 18, the hospital will not share your child’s medical information with you.

Filling out a HIPAA form allows someone access to your medical records so that they can know the status of your condition and how to make the best decisions on your behalf.

5. IRA/401(k) Beneficiaries

Your IRA and 401(k) have beneficiary forms that you ought to review annually. These beneficiaries are who will receive your assets upon your demise. Often, a person assumes that their will dictates who receives the assets.

However, there are more costs involved with a will than if you just added a beneficiary to your accounts.

Also, you can add:

• Primary beneficiaries
• Primary contingent beneficiaries
• Secondary contingent beneficiaries

In this case, the funds go to the primary beneficiaries if they’re alive, then the contingent beneficiaries and then the secondary contingent beneficiaries if the other beneficiaries are no longer alive.

You can also add a charity or other entity as a beneficiary.

We recommend filling out a person’s full information, Social Security number and so forth. You can also leave money to a person, and if they’re no longer living, it will go to their heirs instead. Adding beneficiaries makes transferring these accounts much easier when you pass on.

6. Transfer on Death Brokerage and Bank Accounts

First, there are two types of accounts. Joint accounts are the easiest because if you have a joint account with someone and you die, the account becomes 100% their account. However, what happens if:

• Both of you die at the same time?
• You don’t have a person to have a joint account with?

A transfer on death or beneficiary is the easiest way to transfer these assets from your account to your heirs. Otherwise, the assets will be divided by the courts, which can take time and money in many cases.

Filling out a transfer on death makes it super simple for the person inheriting the account because they only need to fill out a form and supply your death certificate to receive the funds.

Yes, you can create your estate plan and add in a trust, but a trust is not an essential item of every estate plan. However, these six items above are the six that we believe are essential to an estate plan and must be included in every plan.

If you would like to learn more about estate plans, schedule a call with us today.

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