Estate Planning Isn’t Just for the Wealthy: Why Every Adult Needs a Plan

By Ethan Stone | Jameson Stone Law

You don’t need a large estate to need an estate plan. If you have a bank account, a retirement plan, children or people who depend on you, there are decisions worth making now. And regardless of what you own, it’s important to consider who could make healthcare and financial decisions for you if you couldn’t make them yourself.

Putting a plan in place gives you a say in those decisions and can make a difficult time a little easier for the people you care about.

Start with the essential documents

Most people can start with three basic documents:

• A healthcare power of attorney and living will to identify who can make medical decisions and document preferences for care.
• A durable financial power of attorney to authorize a trusted person to manage financial matters when needed.
• A will to direct probate assets, name an executor and identify preferred guardians for minor children.

Plan for incapacity, not only death

Powers of attorney can be just as important as a will because they apply during your lifetime. If an accident, surgery or illness leaves you unable to make or communicate decisions, the people you selected can act under those documents. Without that authority, family members may need to ask a court for permission to manage certain decisions.

The important thing is to complete these documents while you still understand what you are signing and know what you want. We often receive calls from hospitals or hospice care after a crisis has already started. Sometimes we can still help, but once a person no longer has legal capacity, the available options become much more limited.

Make sure the pieces work together

A will does not control everything you own. It generally controls assets held in your name alone, but retirement accounts, life insurance, jointly owned property and accounts with beneficiary or transfer-on-death designations may pass another way. That is why those records need to be reviewed along with the will.

Legal documents are only one part of the plan. Reviewing asset ownership and beneficiary designations at the same time helps identify inconsistencies before they affect a transfer. It also allows the attorney to coordinate with the client’s accountant, financial advisor and insurance professional so that the legal, tax, financial and insurance pieces support the same intended result.

Review the plan as life changes

A plan should be reviewed after events that change your family, finances or responsibilities. Marriage, divorce, the birth of a child, a death in the family, the purchase or sale of a business and significant changes in assets may affect the people you have named or the way property will pass. Reviewing the documents and beneficiary designations together helps keep the plan consistent.

Clear, current instructions also make the process easier on your family. If the plan identifies the decision-makers, explains where assets should go and keeps important information organized, your family has a clearer idea of what to do when the time comes.

Take the first step

Start by gathering your current documents, asset information and beneficiary designations. An attorney can review what you have and explain whether it still works or needs to be updated. Then identify the people you trust to handle healthcare decisions, financial matters and estate administration. Your accountant and other advisors can help address related tax, financial and insurance considerations.

A useful estate plan answers three questions: Who can act for you, what should happen to your assets and whether your documents and beneficiary designations work together. Gathering your current information and asking an attorney to review it is a practical place to start.

This article is the first in a two-part series based on “S.P.A.R.K. Estate Planning Essentials: Legal, Financial & Tax Considerations,” co-presented by Ethan Stone, Attorney, and Garrett Murphy, CPA. Continue with Garrett’s article, “When Estate Plans and Tax Plans Don’t Align: Common Mistakes to Avoid,” for a closer look at the tax considerations that can affect your plan.

About the Author

Ethan Stone is an attorney at Jameson Stone Law whose practice includes estate planning and estate administration. He works with individuals and their accountants, financial advisors and insurance professionals to align legal documents, asset ownership and beneficiary designations with the client’s broader financial and tax planning.