You might think New Year’s resolutions are all about fitness goals or getting organized but there’s a bigger picture to consider. As your life changes, estate planning should be on your radar, too. The start of the new year is the perfect time to create a new estate plan or update an existing one.
As you get ready to celebrate, grab a notebook and outline all your New Year’s estate planning resolutions. In this article, we’ll delve into the important components of estate planning, including when to review your estate plan. These steps are essential for ensuring your legacy and protecting your family for generations to come.
Get Smart
Although estate planning is about honoring your final wishes it’s also about planning for life events such as retirement, illness, raising young children, saving for college, and so on. But who needs an estate plan? Just about everyone!
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Our Philosophy
Estate planning goes beyond money, and includes intellectual, spiritual and human wealth.
To get started, here is a breakdown of the key aspects of an estate plan. It’s important to do more than a New Year’s estate planning review, especially if your documents are more than 3-5 years old or if you have had major life changes such as divorce, marriage, new children, or significant health issues.
- Advance Health Care Directive (AHCD): Designates an agent to make healthcare decisions on your behalf if you are unable to do so.
- HIPAA Release: Authorizes someone to interact with medical professionals and access your medical records. The HIPAA Release is necessary for your health care agents to make medical decisions under your AHCD.
- Emergency Child Medical Form: Names a person to make medical decisions for your minor children, providing them with essential information.
- Will: Outlines asset distribution, appointing guardians for minors, and naming an executor to manage your estate.
- Revocable Trust: Designates successor trustees to manage trust assets, which is important if you are aging or disabled and when you pass.
- Power of Attorney (POA): Designates agents to act on your behalf regarding assets in your name if you are disabled.
- Beneficiary Designations: Specifies where assets such as retirement funds, insurance proceeds, and others should go after your death.
- Deeds and Other Title Documents: Ensures proper ownership and transition of real estate and other assets.
Another important element of estate planning is the protection and management of your assets. Having a clear and detailed balance sheet is a good starting point. From there, you can carefully review each asset to understand how it might be best protected. By taking a thoughtful approach to assessing the risks of each asset, you can safeguard against potential lawsuits and claims.
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Additionally, if you have any irrevocable trusts (like life insurance or asset protection trusts) or business entities (such as LLCs or S corporations), it’s time to review their governing documents and their operational formalities. By failing to ensure your trust operates correctly and fulfills its legal requirements, you may lose your tax benefits and be vulnerable to creditors and the IRS.
Protecting the Ones You Love
Many people unknowingly have dangerous gaps in their insurance and 67% of Americans don’t have a Will or estate plan. That’s why it’s important to understand your options thoroughly and ensure you have the right coverage for you and your beneficiaries.
The good news is you can modify your policy and deductibles to fit your financial and personal needs. And if your trust and business documents aren’t sorted or you have not reviewed them annually with your advisors, it’s time to add that to your New Year to-do list. This year give the gift of security with an up-to-date, comprehensive estate plan. Ensure your AHCD, POA, and Revocable Trust are all current and reflective of your wishes.
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