This week we are revisiting some of the best Daily Economy blogs of 2016. This piece, which first ran in February, was the #1 best-read Daily Economy blog of the year. Its companion piece, on wills and trusts, can be found here.
Prior to joining AIER, I worked for various banks in my community, first as a teller, and then as a financial services representative. The one thing that struck me early on in my banking career was how many people had no clue about their need for estate planning. I must admit, I only learned the importance of estate planning from my initial bank training and witnessing what happened to those who didn’t plan. This certainly was not a topic ever mentioned by my parents, and looking back, it should have been.
According to AARP, more than 50 percent of Americans do not have a will. I know that no one wants to recognize their own mortality, but why are half of us leaving our loved ones without guidance and our assets to the unpredictability of a probate court?
So what is estate planning?
Everyone works hard for their money. They acquire assets and investments with the money that they earn, and hopefully those assets and investments appreciate as they get older. Often times, inheritances from other family members add to the value of an estate. Estate planning is protection of everything you and your family have worked so hard to achieve. Estate planning is not only for the extremely wealthy.
It’s never too early to have an estate plan in place. You can start the moment you turn 18. Most people won’t think about their estate until they experience a major life event, like a marriage, death, the birth of a child, or the purchase of a house. However, there is no need to wait. Estate plans can help manage health care decisions, distribute personal belongings, and keep peace in your family during an extremely tough time.
If you are looking for a good place to start, AIER has an easy-to-follow estate planning guide called “If Something Should Happen- How to Organize Your Financial and Legal Affairs.” It’s available for free download here. It has useful worksheets where you can record your own personal estate information and give direction to the people that will take care of your affairs if something happens to you. A print version is also available in the AIER Bookstore.
In the meantime, here are two valuable documents everyone should have:
Durable Power of Attorney (POA)
A durable power of attorney names someone to make health care or financial decisions for you in case you become too ill or incapacitated to do so yourself. Everyone over the age of 18 should have one in place, because once you’re no longer a minor, your parents lose the authority to tell a hospital how to treat you. They would also have no access to your bank accounts for funds needed to cover emergency medical expenses or everyday household expenses while you recuperate. The individual holding power of attorney can make these decisions and access your money. Free Power of Attorney forms are available here.
A living will and power of attorney usually go hand in hand. This document goes into detail about how you want health professionals to treat you should you become unable to communicate. For example, a living will indicates whether you want a hospital to leave you on life support, and if so, for how long. Aging with Dignity for Five Wishes is a non-profit that allows you to make a free living will which you may access, change and print for one year.