Creating an estate plan that clearly states your wishes for distributing your assets and your final arrangements is one of the most meaningful gifts you can give to your family and loved ones.
This last gesture, which doesn’t always require an estate planning attorney, frees those you hold dear of the burden of trying to guess what your final wishes might be. It also eliminates or reduces the real possibility that the state will have to step in to make end-of-life and survivorship decisions for you.
As an added incentive, April is National Financial Literacy Month, making this a great time to include estate planning in your money management routine.
So where do you start? How do you leave a legacy for the people you love? During a Food For The Poor (FFTP) webinar, Where There’s a Will, There’s a Way, tax, trust, probate and estate planning attorney Adam Goldberg, JD, LLM, Ed.D., offered expert advice on the topic.
Here’s a checklist for creating a sound estate plan:
Write it Down in a Will: If you already have a will, you are already ahead of at least 50 percent of Americans. It is a very basic document that must be in writing unless you’re in one of the few states in the United States that accept oral wills. A will:
- Outlines the distribution of your assets.
- Appoints guardians for your minor children.
- Does not require a lawyer. You can purchase a will “kit” or “template” online if that is your preference.
- Can easily be created and revised.
- Must go through probate proceedings, which can delay the distribution of assets and comes with court costs.
Consider a Revocable Trust: Similar to a will, a revocable trust outlines the distribution of your assets. It may be the better option if you have a large, complex estate and want more control over how your assets are distributed. You do a bit of work before it is final, but your beneficiaries avoid the time and expense of going to probate court. If you choose a revocable trust, you’ll need to:
- Decide who gets your assets and transfer ownership of your assets to a trust.
- Appoint a trustee who will carry out your wishes. It helps to think of trusts as a separation between “ownership and enjoyment.” The trustee, the person you appoint to manage the trust, is in charge and has “ownership” in that he or she carries out your wishes on when the beneficiaries may “enjoy” the assets you leave behind.
Name Your Beneficiaries: Including the names of beneficiaries on your insurance and retirement accounts eliminates the question of who is to receive what funds upon your death. Your wishes cannot be overruled by a will, which ensures that your assets are given to the people you select.
Create a POD, TOD or ITF: This alphabet soup of letters helps your loved ones avoid probate by stating who receives bank and/or investment assets after you’re gone. While these designations are not as flexible as a will or trust, they are simpler to create. Below is the full name of each designation:
- POD: Payable on Death
- TOD: Transfer on Death
- ITF: In Trust For
Execute a Durable Power of Attorney: This is the most powerful of all documents. With this document:
- You appoint your lawyer, spouse, adult child, or another responsible adult to make decisions about your financial matters on your behalf. Make sure the person you appoint is completely trustworthy as he or she has control of your assets and can remove funds without consulting you.
- You prepare for the possibility that you might become unable to make important financial decisions for yourself. Unlike a regular power of attorney, a durable power of attorney remains intact if you become incapacitated. Both durable and ordinary powers of attorney expire when you pass away.
Designate a Healthcare Surrogate/Healthcare Proxy: This is the person who will make medical decisions for you if you are incapacitated and cannot make them yourself. They can make such decisions as selecting the rehab center that is best for you, approving or rejecting an experimental medical treatment, selecting the appropriate pharmacy to use, and more.
Sign a HIPAA Release Form: HIPAA is an acronym for the Health Insurance Portability and Accountability Act, a federal law that protects your private health information (PHI). This release form allows your designee to access your PHI if, for example, you’re on vacation, need medical care and cannot personally access it yourself.
Draft a Living Will/Advanced Directive: This document provides instructions on medical treatments that you would or would not want used to sustain your life, as well as your preferences on pain management and organ donation.
Make Funeral/Burial Arrangements: Taking this step alleviates a lot of anguish for your loved ones, giving them the space to grieve without the added stress of guessing how to say goodbye. You can stipulate various matters, such as whether you want to be cremated, follow certain religious funeral rites, and stipulate where you want to be buried.
Leave a Legacy: Show your commitment to your community, a preferred charity or organization whose mission you admire by including them in your will or trust. You will make a final contribution in support of a cause that you hold in high esteem and possibly inspire your family to do so as well.
Once you’ve completed the paperwork, your job is done – at least for a while. Dr. Goldberg says it’s essential to review your documents and arrangements every three years to keep them in line with your preferences in case they’ve changed over time and to ensure that the people you entrusted with your affairs are still available, competent and will represent your best interests.
Keep in mind that laws governing estate planning and how documents are filed and maintained vary from state to state. Make sure you know the rules for drafting and filing these documents in the state where you currently live. For additional details, visit www.foodforthepoor.org/wills to watch the webinar with Dr. Goldberg and Elizabeth Welch, FFTP Legacy and Gift Planning Advisor.
To reach the FFTP Legacy & Gift Planning Department, please call 866-501-4052, email firstname.lastname@example.org or click here to schedule an appointment with an FFTP Legacy and Gift Planning Advisor.