October is National Estate Planning Awareness Month, and of all the topics I’ve discussed, estate planning draws the most attention. It affects all of us, especially seniors. Often, however, people don’t seek out advice regarding estate planning because, quite frankly, they don’t know where to begin. The process can often start with your CPA, attorney, or financial advisor before having a qualified estate or elder law attorney complete your plan. Only an attorney can draft your documents to complete your plan, but the others mentioned can certainly help get the process started if they have experience or expertise in that area. By asking a lot of questions up front, we and the other professionals mentioned can help figure out what clients are really trying to accomplish and can help them to articulate those goals to the attorney.
So what should you start thinking about before you begin the process? First, you really need to decide who will manage your affairs when you are gone. This person is known as your Executor/Executrix. If you have a trust, they are called the Trustee. This person is extremely important to the process and should be selected with a lot of thought and care. Unfortunately, many estate plans never get off the ground because people often cannot decide who they should choose for their Executor/Executrix. Also, I am not a fan of selecting more than one person for the job to prevent hard feelings among children. While the person you select doesn’t need to be close by in today’s digital age, often the person selected isn’t someone who lives very far away. This is especially true of a person chosen as a medical power of attorney (POA). Your medical POA carries out your end-of-life medical decisions based on an estate document known as an Advance Directive.
Once you know who will carry out your affairs after you’re gone, the next question is “who gets what?”. How do you want to divide up your estate among your heirs? For retirement accounts like an IRA, 401k, annuity, or life insurance policy, you will name a beneficiary directly on those accounts and not in your will. For everything else, such as your home, cars, stuff, etc., that will all pass via your will.
Another consideration is who will make decisions for you if you are alive but unable to make those decisions yourself. This is known as your Power of Attorney. This person will manage your daily affairs, such as paying bills, etc. among other things.
Now that you have a will, a power of attorney, and an advance directive (or POLST- Portable Medical Orders), and possibly a trust (if you want more control over the heirs), don’t forget to review your plan every few years or when tax/estate laws change. Be sure to ask your CPA, financial advisor, or attorney if recent law changes may affect your situation. Keeping your plan current is very important.
The final thing I’ll say is that the most important step in the process is the first one. Just get started because the longer you wait, the harder it can be to make those decisions. Think about who you want to manage your affairs and who you want your estate to go to, and then go talk to a professional to help you through the process. Register for our upcoming Estate Planning Seminar with Jeffrey Barnes, Esq of KingBarnes on Thursday, November 19th by visiting https://www.reichassetmanagement.com/events.
Frequently Asked Questions About Estate Planning
1. When should I start the estate planning process?
The most important step is simply to get started. Estate planning can feel overwhelming, but beginning with basic decisions—such as who should manage your affairs and who should receive your assets—can help you move forward.
2. What is the difference between an Executor, Trustee, and Power of Attorney?
An Executor/Executrix handles your affairs after your death, while a Trustee manages a trust. A Power of Attorney (POA) makes financial and other decisions on your behalf if you are alive but unable to make those decisions yourself.
3. How often should I review my estate plan?
The article recommends reviewing your estate plan every few years and whenever tax or estate laws change. Consulting with your CPA, financial advisor, or attorney can help determine whether changes in the law may affect your situation.