Estate planning basics: Three things you need besides a will — and why you need a will, too

Barry Glassman, special to wtop.com

WASHINGTON – If you care about who will get your assets and care for your minor children upon your death, creating a will is strongly recommended.

Without one, your state will decide who gets your money, typically in a certain order, starting with your spouse, then your children, moving on to your parents, then siblings and finally going to a broad category called “other,” should none of the previous people exist.

A will is the most basic of estate documents, yet 50 percent of Americans with children and 41 percent of baby boomers (age 55-64) don’t have one, according to a survey from RocketLawyer.com.

That’s a lot of potential court dates with families fighting over money and kids. This potential nightmare can be solved simply by telling the world — in writing – – who gets what.

Aside from a will, there are three important documents that all of us should have, but most don’t. If you would like to stay in control of your money and your medical decisions until the end, then here’s what you need to consider:

1. Beneficiary designations: If you have a life insurance policy, or any type of retirement account, you likely have signed a beneficiary designation. This is an extremely important piece of paper because who gets this money is not determined by your will, but who you named on this form.If there were any changes in your life — such as getting married or divorced, or having a child and then more children — it’s time to revisit who’s listed as your beneficiaries. To find out who you currently have designated, contact your insurance company for life insurance, your employer for 401(k) or your brokerage firm for IRAs. 
2. Financial power of attorney: Creating a financial power of attorney lets you designate someone to make financial decisions on your behalf, should you become incapacitated or unable to make those decisions for yourself.You can decide the scope of powers to grant your “agent” — from access to your financial accounts to managing all your financial affairs. Without a Financial POA, the court will step in and appoint someone to take care of these decisions.This process can take time, and while the court typically appoints a close family member, they may not be the person you would choose. This is especially imperative if you have a non-spouse partner.

    

3. Medical power of attorney: Like the financial power of attorney, a medical POA lets you choose who will make medical decisions on your behalf if you are not able to make those for yourself. The power allows your designee to have access to your medical records, consult with your doctors and admit you to a hospital or long-term care facility, among other things.Your medical POA will also see that your Advanced Medical Directive is carried out. In this important document, you provide specific end-of-life instructions for what type of care you want or don’t want, such as tube-feeding and/or living on a ventilator.These decisions can be deeply personal and incredibly difficult for loved ones to make, so it’s best to make sure that your wishes are clearly defined.

Once you have these documents in place, make a point to periodically review and update them, especially if you have had any changes in your life. Keep in mind that these are just the basics. A good resource to learn more and to download sample estate planning documents is www.findlaw.com.

Editor’s Note: Barry Glassman, CFP