Listen to Kevin on Wisconsin Public Radio

On Your Money® Members | Sign Up (FREE)Login

Logo

Estate Planning

by Kevin McKinley - May 1st, 2016

Posted Under: estate planning

Whether it’s a friend, family member, co-worker, or celebrity, when someone you know or know of dies suddenly and too soon, a natural eventual reaction is to consider what might happen if you were to suffer a similar fate. 

Although it may be difficult to avoid such an event, a little advance planning now can ensure that the only loss experienced by those who care about you is emotional, rather than financial and logistic. 

Here are some tools you can (and should) use to protect yourself, your stuff, and your loved ones. 

Yourself

Living will A living will provides instruction as to what type of medical care you would like when you are alive, but unable to make the decision for yourself. Such measures include resuscitation, tube feeding, and organ donation after your death. 

Healthcare power of attorney This document designates a person or persons who can make medical decisions for you when you are alive, but physically or mentally unable to do so. You can choose a trusted friend or family member, and name alternates in case your first choice is unavailable. 

Financial power of attorney You should use this to name a person to take over the management of your assets, income, and spending if you become incapacitated.  The tasks can include paying bills, filing taxes, depositing Social Security checks, and overseeing your investments. 

Your stuff

Will A will is the basic tool used to distribute your assets and property after your death, as you have intended. It can also be used to name an executor of your estate. If you don’t name one, the court will appoint an administrator to handle the task. 

Trust There are many different kinds of trusts, for many different purposes. But one common tool is a living trust, which will contain your assets while you’re alive, and then disperse them to beneficiaries. You also might choose a trust to prevent younger children from inheriting too much money too soon.

Beneficiary designations Retirement accounts, annuities, pensions, and life insurance policies should be updated to make sure whomever you actually want to receive those amounts will get their money, in the portions that you designate. 

Account inventory A simple list of all of your current investments, account numbers, and contact information should be kept in a safe place (like a safe deposit box) so that your executor or administrator can easily find, organize, and allocate your assets according to your wishes. 

Charitable gifts If you have a favorite non-profit organization, consider adding them as  a beneficiary of your estate. You should alert the group in advance so that they are aware of your benevolent intentions. 

Your loved ones

Life insurance If anyone is relying on your income (i.e. a spouse or child), you should make sure you have enough life insurance in place to cover their future living expenses, as well as extraordinary expenses (such as college costs). Stay-at-home parents should have policies on their lives, too.

Guardians Parents of minor children should designate who should care for the kids if the parents aren’t around. A failure to do so means a court may decide, and that decision may go against the parents’ unstated wishes. 

Pets By the time most of us die, the humans who once relied on us have grown old enough to take care of themselves. But your favorite dog or cat or parakeet still needs someone to look after him or her, so don’t forget about choosing a person to care for your pet, and leaving some money to cover any future costs. 

Get some help

Many of the aforementioned actions can be accomplished without the assistance of attorney, for little or no cost. But there is an old adage that applies here: You can spend a little money having an attorney help you now, or a lot of money having an attorney settle your estate after you’re gone.

Hopefully you’ll invest some time and money taking the proper steps today, so that your loved ones remember you fondly for eternity.