If you think estate planning is for only the elderly or wealthy individuals, think again.
Everyone has collected some stuff, what professionals like to call assets, possessions, investments — and don't forget the liabilities (debt), like student loans, car or credit card balances. Even if you do not think you have much, it's important to have a plan for what you do have, and what you want to do with the stuff, if you pass away. There are some basic documents everyone should consider having.
If you do not complete the appropriate documents, the state you reside in has its own statutory regulations/ procedures to dispose of your property when you pass away. The statutes are usually based on spousal or blood relationships. If no relatives exist or cannot be found, the property reverts to the state. In other words, if you do not plan right, you not only surrender your control over your things, but your things may not go to the party you want — such as a partner, life partner, friend or charity. So what can you do?
Name Your Beneficiaries on Your Accounts
The simplest and first thing is to list your beneficiaries where you can. It is common to designate beneficiaries on your retirement accounts (401(k) 403(b), IRA etc.), since it is part of an application. You can list beneficiaries on bank and investment accounts by setting up a TOD (Transfer on Death) designation. It's simple to do and doesn't cost you anything but time to complete a form. Also, be careful when listing beneficiaries, since the designation supersedes any wish you make in a will.
Get It All in Writing
Consider completing a will. A will is a legal document and is just a written statement of your intentions, including where you want your possessions to go and how you want the orderly disposition to happen. You can get a template at any stationary store or online. I usually recommend seeing an attorney, since every state has a few nuances, like if it has to be notarized or witnessed by a couple of people. Or, if you have certain or special items, limitations or circumstances or heirlooms to consider.
State Your Health Care Wishes
A Health Care Proxy allows someone to make health care decisions and/or carry out your health care wishes, if you are not able or choose not to make them. If you have ever been admitted to a hospital, this is usually a mandatory form. This form can be found online or other sources, including an attorney.
Choose Someone to Step In
A Durable Power of Attorney form allows someone to step into your role and carry on your life, like making financial decisions, such as signing a check to pay your bills (rent, utilities, student loans or credit card), or transferring funds from a savings to checking account, etc. If you are a young parent or anyone other than a legal guardian who has been to an emergency room, you know this form, or limited power of attorney, very well. There is a very big difference between a limited power and durable power of attorney.