Estate Planning Basics: Don’t Leave Your Estate in a “Purple Haze”
Estate planning may be one of the last things that anyone wants to think about. Not only is it difficult to contemplate our mortality, but human beings may also have a natural tendency to procrastinate. The importance of proper estate planning can become clear when a celebrity dies without a will. Some famous names with this dubious distinction were Aretha Franklin and Prince. After legendary guitarist Jimi Hendrix died in 1970 without a will, the battle over his estate lasted for more than 30 years! Below are some basic tips to ensure that you don’t leave your estate in a “Purple Haze:
- Consider establishing the following documents:
- Will: provides instructions for the distribution of assets upon your death. Assets distributed by will are subject to the public probate process (the court verifies the will’s legitimacy).
- Living Trust: provides instructions for the distribution of assets upon your death. Assets held in the trust avoid probate. A living trust allows for specific control of asset management after death.
- Durable Power of Attorney: assigns an agent to act on your behalf for financial matters if you are incapacitated and unable to do so.
- Healthcare Power of Attorney: assigns an agent to act on your behalf for healthcare matters if you are incapacitated and unable to do so.
- Living Will: provides instructions on end-of-life treatment.
- Establish guardians for minor children. Guardianship provisions may be included in a will or living trust.
- Have a plan for your “digital estate:”
- Your “digital estate,” such as smartphones, cloud data, and social media accounts may now be considered a part of your basic estate plan.
- Consider creating instructions for the management of digital assets upon your death. You may even wish to name specific digital assets in your will or living trust.
- Store your estate planning documents:
- Keep original copies of documents in a safe, secure place and securely store digital copies.
- Provide instructions to trusted loved ones on how to retrieve documents.
- Confirm that beneficiaries on retirement accounts and life insurance policies are appropriate.
Finally, estate planning is not a “set it and forget it” exercise. It is important to reevaluate your estate plan periodically, particularly if you have experienced a major life event such as marriage or the birth of a child. Additionally, estate planning is not a one size fits all process. As such, consult with a trained professional, such as an estate-planning attorney, who can ensure that documents and other considerations are in line with your wishes and tailored to your situation. Do not be like Aretha Franklin and be sure to treat your estate plan with the “Respect” it deserves. Ok, I’ll stop...
As always, please reach out to your trusted advisor with any questions.