Why Everyone Needs an Estate Plan – Yes, Even You

Millennial Group

 

Three Tools to Help You Get Started

October 2018

Let’s get something out in the open: The phrase “estate planning” is somewhat of a lie. It’s a misnomer – it implies you have to be as wealthy as Scrooge McDuck to make plans for your money and your health. That’s simply not true. No matter where you are in your life – just starting out, a couple years into your career or planning for retirement – you can and should have an estate plan.

There are advantages to starting the estate planning process early in life. You’ll gain peace of mind and may even encounter some tax benefits. That said, estate planning is also a really effective way to plan for the unexpected and for what will happen when you’re gone.

Here are three core estate planning tools to consider when you’re ready to start an estate plan:


Last Will and Testament


Why you may need it:

You’ve already accumulated some assets or have young kids and want to make plans for what would happen to them if you were gone.

  • A will is a legal declaration of how, when and to whom you want your assets to be distributed upon your death. You can use a will to appoint an executor, or someone to manage your estate if you become incapacitated or pass away.
  • If you die without a will, your assets could be distributed according to the laws of the state you live in, which could run counter to your personal wishes.
  • If you have kids, you can also use a will to appoint a guardian for your minor children.


Power of Attorney


Why you may need it:

You’re ready to formally designate someone you trust as the person who will make financial and/or healthcare decisions on your behalf if you cannot speak for yourself.

  • A power of attorney is a legally binding document that appoints someone to act as your agent and manage your financial or legal affairs.
  • You can specify it as “limited” or “temporary,” which means it would no longer be in effect if you became incapacitated. On the other hand, a “durable” power of attorney remains in effect until death.
  • A healthcare power of attorney is a separate document that allows you to appoint someone you trust to make healthcare decisions on your behalf if you become incapacitated.


Living Will (Advanced Healthcare Directive)


Why you may need it:

You have strong feelings about the medical care you’d like to or would be willing to receive if you became incapacitated or extremely ill.

  • A living will, which is also known as an advanced health care directive, formally outlines your wishes for medical care. For example, you can state whether you want doctors to take extraordinary measures to keep you alive, or outline the level and duration of care you’d want to receive.

Whether you’re just starting to save or already have a couple of gold coins in the bank, you can start to develop an estate plan. While it is a somewhat misleading phrase, estate planning is a straightforward, impactful way to plan for both the expected and the unforeseen. Baird’s Financial Advisors can work with you to shape your personal and financial wishes into a concrete plan.