While it may be a task that’s low on your to-do list, estate planning can provide guidance for your loved ones in the future. It will also give you a sense of relief as you think about passing on your household and assets. “Most people would benefit from having basic estate planning documents in order to make sure that their wishes are carried out,” says Misty Lynch, a financial planner at John Hancock Financial Services in Boston.
Setting up arrangements for your finances, health, and home can quickly become daunting. There are often numerous documents to draw up and different family members and charities to consider. Here are some frequent misconceptions surrounding estate planning, as well as the realities behind them.
A will can oversee the distribution of all my assets. A will allows you to lay out how your belongings should be distributed. This might include a car, a boat or family heirlooms. It’s important to note, however, that a will has specific limitations. “The only thing that the will has any control over our assets that are in the person’s name alone,” says Patrick Simasko, an elder law attorney at Simasko Law in Mount Clemens, Michigan. If you have joint accounts or accounts with beneficiaries on them, the will won’t have any controlling power over those accounts.
Once I have my assets in order, I’m set. In addition to having a will and making sure you have beneficiaries listed on your accounts, you’ll want to consider your health and state of mind. You may opt for a living will, which outlines what type of medical treatment you’ll want in certain circumstances. You might also decide on a health care proxy, or durable power of attorney for health care, which appoints an individual to make medical decisions for you if you are unable to do so. “Health care powers of attorney are important to have, but it’s equally important to communicate with the person that you are naming as your agent about your health and your health care wishes,” says Daniel Huntley, an associate who specializes in estate planning at WilliamsMcCarthy, a law firm in Rockford, Illinois. Doing so will help the individual make informed and responsible decisions later on.
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