Estate planning isn't fun. If you're like most people, deciding how your assets will be allocated after your death and who will make important decisions for you if you can't make them yourself is especially difficult. Not a pleasant experience.
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However, it is necessary to create an inheritance plan. It's also important to dust it regularly and make sure the instructions say exactly what you want.
“We recommend reviewing your estate plan at least once a year,” says Eric Jochimsen, CFP, founder and financial planner of JBY Financial Planning. “This allows you to stay up to date with your current living situation.”
In some cases, more frequent reviews may be necessary, he said.
“Life events can also trigger a random inspection of your estate plan,” he says. “After a major life-changing event, such as moving, changing jobs, death in the family, divorce, or worrying about your ability to act on your behalf.”
One important thing to check, if necessary, is who you have appointed to represent you, he said.
“We feel it is important to ensure that the beneficiaries are still accurate and that the person you have named as your personal representative, power of attorney, or trustee is still competent to serve in that role,” he said. Ta. “This is especially important given that they may be grieving during difficult times.”
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Creating an estate plan
If you're not interested in reviewing your estate plan on a regular basis, you're not alone.
“Estate planning is often neglected by individuals and their advisors because it is the least interesting part of financial planning,” said Robert J. Allan, CFA, CFP, CPA, Managing Director, Wellon Partners. I am. “But like any other part of the plan, it needs to be updated regularly.”
He said his company has an estate planning document called the “Core 4” that all clients are encouraged to have. This includes last wills, powers of attorney, advanced care directives, and health care powers of attorney.
“A will explains what to do with your estate,” he said. “In other words, how all your 'property' is distributed among your heirs.”
He said a power of attorney allows you to appoint someone to represent you if you are unable to do so.
“Usually they are triggered when you are incapacitated,” he said. “The authority you give this individual can be broad or narrowly defined, depending on your needs.”
He said advanced treatment directives give doctors clear instructions about the type of treatment they want to provide.
“It is frequently used to provide a 'DNR' or 'do not resuscitate' to someone who does not want life support,” he said. “Treatment may also include a variety of other treatments that you may or may not want.”
Finally, he stated that a medical power of attorney is essentially a power of attorney that focuses solely on medical matters.
“If you become incapacitated, you can designate an individual to make medical decisions on your behalf,” he said.
While it's ultimately up to you to review these documents regularly and update them as needed, he said it's important to work with the right team.
He said: “A good advisor will need to monitor your personal circumstances and may advise you when to review or amend your documents if they identify any external factors that require you to review or amend your documents.” Ta.
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Who needs estate planning?
If you don't already have an estate plan, you may be wondering if you need one. According to Legal Zoom, most people begin estate planning after marriage, the birth of a child, or a death in the family, but the process can begin any time after she turns 18.
One of the first things to do is decide whether you need a will or a living trust. While final wills may be simple to create, they often have to go through probate court after the owner's death. Alternatively, setting up a living trust may take longer and require additional paperwork, but probate is more likely to be avoided.
How you create your estate plan is up to you. This process can be done in person or online, but the latter is usually the cheaper option.
According to the National Council on Aging, a basic online estate planning package can be purchased for less than $200. Comparatively, the cost of hiring an estate planning attorney may cost him several hundred dollars per hour.
Which option you choose will depend on several factors, including the complexity of your estate plan (do you have dependents, don't know how to divide your estate, etc.) and your budget. Many online services also offer packages that allow you to speak directly with a lawyer. This can be a thorough and affordable option.
After all, creating an estate plan is a very personal process. There is no right or wrong way to deal with this, as long as the relevant documentation covers all bases.
It can be scary to take this step, as it may feel morbid to create a directive regarding your own death. But this is important. This will make your loved one's life easier while ensuring that your final wishes are known.
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This article originally appeared on GOBankingRates.com: I'm a Financial Advisor: How Often Should I Review My Estate Plan?
