The sooner you start estate planning, the more prepared you are for whatever comes up. Life happens, and not always in the way we’d like.
It pays to prepare your estate at any age. The following eight items can help you maintain control over your medical and financial decisions in any scenario.
- A will: If you are young and your only asset is retirement savings, you already have a designated beneficiary and may not need a will. Once you acquire any significant assets that don’t require a beneficiary, however, such as property, consider a will even if you are single.
- Durable power of attorney: This estate planning document lets someone make decisions regarding another person’s finances. If you care for your aging parents, you can’t manage their finances if they become incapacitated unless you have a durable power of attorney.
- A living will: This legal document lets you make known your wishes for end-of-life treatment, which helps avoid family fights. The directives include whether you want to be intubated, resuscitated or receive treatment to sustain life.
- Guardian for your children: If you have children, this can be difficult, but choose a guardian, so your family won’t have to fight over raising your kids if you’re gone. Consider values, geographic location, competence and child-rearing skills. Review your choice periodically as people and relationships change.
- Up-to-date beneficiary designations: Even if you don’t have a will, you will need to designate beneficiaries for any 401(k) or life insurance at your job. These supersede beneficiaries in a will, so update them if you divorce or have other life changes.
- Health care proxy: Once you turn 18, no one has a legal right to make medical decisions for you. If you become incapacitated, this document allows a parent or partner the right to make important medical decisions on your behalf.
- A trust for extra control: If you already have designated beneficiaries for your assets or they have joint ownership, you probably don’t need a trust. If you have minor children, a trust is essential if you want to leave them property. Minor children cannot legally hold property in many states. You can avoid probate with a trust, direct a trust to distribute money when a child reaches a certain age, control how much money they get monthly or yearly and many other features.
- A plan for long-term care: Instead of waiting until a crisis happens to deal with long-term care costs, you can be proactive and decide if you want to age at home or move to a retirement community. You can also decide how to pay for the cost of healthcare by using savings, long-term care insurance or by managing your assets so you can qualify for Medicaid.
Now is the time to get started on your estate planning.