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4 Must-Haves in Estate Planning Thumbnail

4 Must-Haves in Estate Planning

As the old saying goes, nothing is certain except death and taxes. As a financial planner who focuses on tax planning, I’d disagree that taxes are always certain! But unfortunately, no amount of planning is going to help any of us avoid death. For that reason, estate planning is a must in any financial plan. Keep in mind as we discuss each, getting the documents in place is priority #1 but reviewing them annually to make sure they still align with your wishes is crucial.

There are 4 Must-Haves for any estate plan:

  1. Will
  2. Durable Power of Attorney
  3. Healthcare Power of Attorney
  4. Beneficiary Designations

We’ll walk through the importance of each:

  1. In a basic estate plan, a Will is the first must-have. While many people think estate planning is only for those with wealth, a simple will is an inexpensive legal document that details your requests at your passing. For example, let’s say you have several children and one of your daughters has always loved your fine China while another has loved the necklace from your wedding day. A will is where you would detail those requests so upon your death you can avoid loved ones becoming bitter toward each other, and in some cases, help avoid future legal battles between family members. For those with more complexity in their household or their wishes, a trust may make sense.
  2. A durable power of attorney (DPOA) plays a very important role in maintaining your finances when you are no longer able to. A DPOA can play a big part in your life before death as well. Consider that research has shown 1 in 7 workers can expect to become disabled for five years or more before retirement. In 2008, the US Census Bureau reported that 18% of the population was classified as disabled. A DPOA assigns someone, either a spouse, family member, friend, or 3rd party, to make financial decisions for you when you are not able to. Note that there are a few types of financial POAs, the two most popular types are springing and durable. A durable POA is active as soon as the legal document is completed. A springing POA is not active until some type of event, usually a diagnosis of incapacity from a doctor. The problem we’ve seen with springing is that sometimes family members will know a loved one is no longer able to make proper decisions, but when they visit the doctor, they have one of their ‘good days’. Or in the case where someone doesn’t want to give someone access to their finances now, they assign someone as a springing POA. If you felt uncomfortable assigning someone a durable POA while you’re thinking clearly, why would you feel better about them springing into being your POA once you are incapacitated or no longer thinking clearly?
  3. A healthcare power of attorney is similar to a Durable power of attorney in that it assigns someone to help you make decisions when you are unable to but specifically around your health and the care you receive. This document literally can give someone your life in their hands. It’s important to find someone who shares similar beliefs as you in end-of-life care or something who you trust to carry out your wishes.
  4. After completing your will, you will have designated those who you wish to leave your personal belongings to. What many people don’t know is that the beneficiary designations you place on a retirement account like a 401(k) or IRA actually supersedes that of a will. Meaning the designations you have on your retirement accounts actually override a Will. For example, let’s say someone was divorced and went through the exercise of updating their will, finding a new person for their Durable and Healthcare POA but never changed their beneficiaries from their ex-spouse on their retirement accounts. Upon their death their retirement accounts would legally be entitled to their ex-spouse because the beneficiary on file carries more weight than their updated Will. That’s why it is so important to review and update beneficiaries as life changes.

If reviewing and updating these documents is not something you think about, a team around you including an attorney and financial planner, like our firm, can help you avoid mistakes that affect your loved ones when you are no longer able to make decision or are no longer with us.

To learn more or to discuss your investment needs. Please reach out to us at 219-465-6924 or through the Contact Us page on our website.


Mark Rosinski, CFP®, CPA

Wealth Advisor


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