It is now 2016. You are married and you have children, but you have procrastinated when it comes to estate planning. Death and disability are topics that nobody wants to think about; however, as a parent and a spouse, you must plan for these situations. Your loved ones depend on you. Here are 5 estate planning tips that you should focus on in the New Year.
Estate Planning Tip #1: Make a Will.
You should contact a local estate planning attorney in PA and you and your spouse should make a Will with the assistance of the attorney. The most important function of the Will is to name beneficiaries who will receive your assets upon your death. An attorney will probably suggest that you include trust provisions in the Will for assets passing to young children. Other important functions of the Will include naming an Executor who will be responsible for administering your estate. Estate administration includes collecting all of the assets and passing them to the named beneficiaries, paying debts, and calculating and paying the inheritance taxes. If your Will includes trust provisions for minor children, you can name a Trustee and empower that Trustee with making discretionary distributions for the benefit of the children, including their health, maintenance, support and education. Your Will can also name Guardians for your children.
Estate Planning Tip #2: Buy Life Insurance.
Life insurance can replace your income. It can be the sole means of income and support for your spouse and/or your children. There is no one size fits all approach to purchasing life insurance. In order to decide on an appropriate amount, it is important to consider your earnings, expenses, age of the children, spouse’s income, etc. You should contact a local life insurance agent who can discuss the various products and how each product may benefit you and your survivors.
Estate Planning Tip #3: Prepare Powers of Attorney.
You may need someone to make decisions and carry out actions for you in the event that you are disabled or incapacitated. The easiest way to plan for these situations is for you to prepare Power of Attorney documents. Pennsylvania estate planning attorneys will often suggest Power of Attorney documents to go along with a standard Will. Powers of Attorney can be used for medical decisions as well as non-medical decisions such as paying taxes, selling a home or paying expenses out of your bank account. It is important to fully consider who you should give this power to and under what circumstances. An estate planning attorney can help you.
Estate Planning Tip #4: Prepare a Living Will.
A Living Will can be set up so that it becomes effective only when you suffer from one of two medical conditions: End Stage Medical Condition or Permanent Unconsciousness. These two conditions are very specifically defined under Pennsylvania law. When you suffer from either of the two conditions and you are unable to communicate at that time, you can elect in the Living Will document whether you want to remain on life sustaining treatment or have the doctors remove such treatment. The Living Will is extremely important because without it, your family members will have to make that decision. The decision will be emotional and sometimes family members cannot agree on the decision. This could result in court intervention.
Estate Planning Tip #5: Beneficiary Designations.
Life insurance and many retirement plans including IRAs and 401k plans have beneficiary designations. These designations will determine who that specific asset will pass, without regard to what your Will may state. It is important that you review and update your beneficiary designations. Make sure you name primary beneficiaries and contingent beneficiaries.
Estate planning lawyers usually have fixed fees for standard estate planning documents. For married couples, the standard package will most likely include a Will, Powers of Attorney, and Living Will for you and your spouse. Lawyers often utilize efficient procedures for an initial office consultation, preparation of the documents, and a follow up meeting to review the documents with you. You may invest a little time and money now, but completing your estate plan will give you a sense of comfort and security knowing that your loved ones will benefit.