It is important to follow the estate planning fundamentals.
Many people believe wealth is the pivotal factor for estate planning.
This is inaccurate.
Age is actually the determinative factor when it comes to whether a person needs an estate plan.
Generally, anyone age 18 or older would benefit from making preparations for incapacity or death.
According to a recent CNBC article titled “Estate planning 101: the do’s and don’ts, what to expect to pay and what your options are,” both you and your loved ones could experience unnecessary stress by failing to create a basic estate plan.
What are the basics of estate planning?
Drafting your last will.
A last will and testament provides instructions for distributing your assets when you die.
This involves designating an executor to oversee the administration of your estate and the distribution of assets.
You should detail in the last will whether specific assets must be inherited by certain heirs.
Additionally, you should specify whether unique conditions must exist for an heir to receive the asset.
For example, minors need to reach the age of majority (generally age 18) before they can legally inherit.
Although many people believe the laws of their state simply direct all their assets to their spouse without a last will and testament, this is often not the case.
Many intestate succession statutes, as in Kansas and Missouri, require a portion to be granted to the children as well.
Accounts with beneficiary designations can operate outside the control of a last will and testament in estate planning.
Certain assets allow for you to designate a beneficiary on the account itself.
These are common with life insurance, bank accounts, and investment accounts.
Some states even allow for beneficiary designations on real estate.
For example, both Kansas and Missouri laws provide for the transfer of real estate by beneficiary designation.
In Kansas, the deed is known as a Transfer on Death Deed, while in Missouri the deed is known as a Beneficiary Deed.
Unlike a last will and testament, beneficiary designations can reduce the cost and complexity of probate by removing these assets from the estate.
Creating a durable power of attorney for health care decisions.
It is possible you will require medical attention when you are incapacitated and unable to make your own healthcare decisions.
With a durable power of attorney for health care decisions, you can choose an agent to discuss your care with physicians and make medical decisions on your behalf.
Specifying your wishes in a health care treatment directive.
Although you can provide some instructions regarding care in your durable power of attorney for health care decisions, a health care treatment directive allows you to provide specific guidance regarding life saving treatments.
The agent you assign in your durable power of attorney for health care decisions will advocate for your wishes to be followed.
Establishing a not resuscitate (DNR) order.
A do not resuscitate (DNR) order is not required in estate planning.
If you do want a DNR order, you will need to do so separately from your health care treatment directive.
It outlines conditions where you do not want to receive life-saving treatments.
In some cases, health care institutions request their own forms be used.
Because incapacity and death can happen regardless of age, creating an estate plan should be a priority.
Reference: CNBC (June 20, 2022) “Estate planning 101: the do’s and don’ts, what to expect to pay and what your options are”