The Estate Plan EVERYONE Should Have | Estate Planning TV 059
Today I want to talk to you about the foundational estate plan that everyone should have in an estate plan.
Often people just wonder, “Okay, what kind of plan should I have? Do I need a plan? Why?”
And today what I really wanted to do was just break down for you really quickly the foundational estate plan that everyone should have no matter what.
Whether you’re married or single, whether you have kids or don’t, whether you have a lot of money or don’t, it doesn’t matter, these are the things that you should have in place, and I think as I explain what they are and what they do, it’ll become pretty clear why you should have them.
First things first, estate planning really covers you in two circumstances.
The first circumstance is when you are alive but incapacitated. Think you’re in a car accident and you’re in a coma, or you’re old and you have Alzheimer’s. So, you’re alive but you can’t make decisions on your own for whatever reason.
The second part of estate planning covers you when you’re dead. We all know about that side.
And within each there are certain foundational documents that you want to have that will sort of take care of you and your loved ones when the circumstances arise that need that.
On the alive but incapacitated side, you’re going to start with power-of-attorney.
Power-of-attorney covers basically all of your day-to-day life decisions, and it names someone who is in charge of making those decisions on your behalf when you cannot do it. Pretty straightforward. We’re talking about paying bills. It could be any number of things, cashing checks, signing leases. I don’t know, it could be anything that you need to do on a daily basis. This person would be authorized to do it for you. That’s number one.
Number two is medical power-of-attorney. Medical power-of-attorney, as you might expect, covers the same thing as the regular power-of-attorney but only related to medical decisions.
We typically break those up here because you may not want the same person making your financial decisions as you do making your medical decisions, particularly if you’re married. Often you have one singular person that you want to cover both of you for financial decisions, but each of you may want your own, one of your family members to cover you on the medical side.
The third thing that we’ve got is healthcare directive. Healthcare directive basically says if you are a vegetable, do you want to pull the plug or not. And what that document does is it expresses your specific intent to your medical power-of-attorney, who would then be charged with telling medical staff what to do if you were ever in that condition.
That covers you when you’re alive, but incapacitated. You’re in a car accident and you’re in a coma for six months. All of these people can take care of you.
And then we’ve got on the other side now that you’ve passed away, we’ve got really two documents. One of them I wouldn’t consider to be necessarily foundational but the other one is for sure.
This is the one that everybody knows about, your will.
The will does a couple of important things:
First, it names the person that’s going to be in charge of administering your estate which basically means gathering your assets, gathering your debts, paying your debts, distributing your assets.
Second, if you have kids, it’s going to name your long-term guardians. This is important. The people that you want to step in as parents for you if something happens to you and your spouse, the will is the place that it happens.
If you do not have a will, if you do not have this in your will, a judge will be picking for you, so this is critical. I have kids. This is the most important thing to me. And it is for pretty much all the parents that I talk to.
And then last, but not least, the will directs the distribution of your assets, and this can also be important because if you don’t have a will, then the state is going to pick how your assets are distributed, and often that distribution schedule is not in line with what you would have wanted in real life.
That’s it. Those are the basics. Those are the things that everyone should have no matter what, and hopefully you can see why those things are important because, by the way, if you don’t have a lot of these documents and something happens to you, you will have certain people put into these positions for you, and you’re going to have to pay for it, and you don’t get to pick who the person is.
By creating your own estate plan, you retain all of the power over your life, and over your assets, over everything. By not exercising that power, you’re really, really taking a chance.
If you don’t have an estate plan and are thinking about making one, please click here to schedule a free strategy session with me. We’ll talk about your family, your assets, and I’ll give you some ideas for creating an estate plan that works for you and your family specifically.