Basic Estate Planning Moves EVERYONE Should Make
By John Owens, CFP®, EA
Literally everyone should make these moves, like right now. Stop what you’re doing and go do this!
Check them benies!
Got a 401(k)? HSA? IRA or Roth? It’s time to look at those beneficiaries. If something were to happen to you tomorrow - where would this money go?
Most retirement accounts pass to heirs via beneficiary designation outside of your estate. Simply put, if your estate says the money goes to your siblings - but the file your employer or retirement plan provider has on file is your ex-girlfriend - she gets the money. I’ve seen stranger situations than that - ex-spouses, estranged children, all in line to get funds simply because someone failed to take 5 minutes and log into their 401(k) to check things.
Get a Basic Will
A will determines what happens to your “probate estate” when you pass away. That means any assets that don’t have a beneficiary designation on them. This could be your home, car, bank accounts, cash, Beanie Baby collection, etc. It also designates an executor or personal representative to oversee your estate - someone in charge of paying your final expenses, and distributing your assets. Perhaps most importantly, it often indicates who should take care of your children if you pass with guardianship provisions. THIS REALLY IMPORANT. You want to be the one who decides this - not the court, not state law, but you!
POA, please
Wills are really important, but there’s often a scarier scenario - you become incapacitated but don’t pass away. A healthcare proxy or power of attorney (POA), and financial power of attorney are two key documents to help get your loved ones through that period of time. POAs have the power to make healthcare and/or financial decisions on your behalf. Who will pay your bills? Make decisions on your medical care?
Organize your documents
These documents and designations comprise the bare minimum you need to do on the estate planning front to avoid complete chaos and catastrophe. But simply getting them filled out or completed won’t help your executor/power of attorney if they don’t know where to start. Keep a file, USB drive, email, something, anything that they can access if something happens. A short summary of your situation, wishes, and where to get started if something bad happens.
Consider this estate planning 101. Many of our clients require a lot more than this - including trusts, gifting strategies, and a variety of other complexities to meet their estate planning goals. Be sure to consult with a qualified estate planning attorney.