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We hope you had a happy Martin Luther King Jr day! What a legacy he has. He will forever be remembered for his values and principles. He made a profound impact on the United States and World!
Most of us may not leave a legacy as renowned as MLK, but we do want to be remembered in a positive light by those whom we came across in our lives. I understand that everyone has different circumstances with their family and may not care for estate planning, but I wanted to explain a little bit about estate planning for those whom may be interested.
What is estate planning?
It's planning for your legacy. Not quite like MLK, but more specifically your financial legacy. It's making sure your assets, liabilities, properties, and overall affairs are taken care of when you don't have a say in the matter anymore. This could be for health reasons or because one has passed away.
An "estate" is actually just a person's net worth made up of all of their belongings in life. Estate Planning is deciding what will go to whom. Typically we think of having a beneficiary for everything like 401ks and IRA's, but what about things like a home or land? Your cherished Pokémon card collection or the secret chest of gold buried in the backyard?
When you set up your estate you're basically teeing everything up for your family and the state to make sense of everything you desired. Have you ever been to TopGolf? I love that place! It's like a driving range mixed with a bowling alley. Once you pay, everything is literally set up for you, balls, tees, clubs, and they even keep score for your games. I want to you think of your estate planning like that. How can I tee up my loved ones after I'm gone!?
Unfortunately someone from MN who did not do a good job was the late Prince. He didn't have any estate planning and his heirs have been left in a really sticky spot. (CBS Local)
There are three big considerations when it comes to basic estate planning.
Get a will! 78 percent of millennials (age 18-36) do not have a will. It is the document that decides basically everything for your estate. After accounts that have a listed beneficiary or transfer on death, the Will is what tells the probate court what to do. When someone passes away, whether they have a will or not, their heirs must go to probate with the state to settle the affairs. A will is the official document that delivers the decedent's last will and testament.
It's your certified document that says "If I die, here is exactly what I want. I want this type of funeral. I want my dog to go to my best friend. I want my kids to go to their godparents, not their grandparents. I want my signed Aaron Rogers' jersey to be auctioned off for charity." Anything.
This document helps prevent many legal issues and family quarrels.
A Health Care Directive
This document says what you would like if something happens to your health and you can't make your own decisions. It's also known as a living will. Remember the Terri Schiavo case? She was permanently brain damaged with no hope of recovery. She did not have a living will and her family went through YEARS of turmoil. If she would have had a document that says, "this is what I want and who gets to make decisions for me," they would not have. This is really important even for married couples because depending on the state that you dwell in there may be some legal wiggle room.
A Power of Attorney
This document decides who gets to make financial and affair decisions on your behalf when still living. Things like Alzheimer's, vegetative states, or even long trips abroad could require a power of attorney. It allows someone to act as another's fiduciary guardian to protect their best interest. It sounds similar to the living will or health card directive, but differs in the fact that it is not for health care. This is big for people with families or business owners. Things may happen and you would want your financial advisor to help figure out money issues so that a spouse doesn't have to.
There are several other advanced estate planning tips and tricks like setting up a trust or gifting. But typically those issues matter more and more as one's net worth increases. Getting a will, health care directive, and power of attorney are something I'd suggest for everyone!