Coloradans have among the longest life expectancies in the nation, but it's never too early to start planning your estate. Proactively having an estate plan is a selfless gift you can give your family. If you don't have some type of plan in place, the state ends up deciding what happens to your assets. Here’s what you need to know about estate planning so you can be the one in the driver’s seat.
What is an estate plan?
An estate plan is a comprehensive set of documents that let you determine what happens if you’re ever incapacitated or pass away. It includes decisions like what happens to your children, how to disburse your assets and your medical preferences. Documents used in an estate plan may include a will, trust, power of attorney and/or living will. Here are the purposes behind each of these documents.
A will provides instructions for your assets and custody of your children after you pass away. An asset can be anything from a financial account, family heirloom or vehicle. It’s anything of monetary value you’d like to pass on. If you have children, it’s important to name who you’d like the guardian to be. Leaving this up to chance could set your family up for a battle and your children may end up with the wrong guardian.
Other factors to note about a will are, it has no legal authority until after your death and it has to go through probate court. Probate is a process where a court oversees the transfer of estate assets and makes sure the will is valid.
A trust is an entity you create separate from yourself which holds assets. A trust is similar to a will in that you can provide instructions for how you’d like your assets to be distributed. However, unlike a will, a trust gives you the ability to distribute your assets before your death.
As long as it’s properly funded, a trust allows you to avoid probate court. This means, in most cases, your assets will pass to your beneficiaries immediately upon your passing. If written correctly, a trust can continue being effective even if the trust maker dies or becomes incapacitated.
Power of Attorney
A power of attorney lets you appoint someone else to manage your affairs if you become unable to do so yourself. If you ever became mentally or physically incapacitated, your power of attorney would be asked to make decisions for you—ranging from financial to medical decisions. That’s why it’s important to appoint a person who has your best interest in mind.
A living will expresses your wishes for medical treatment in case you’re ever in a situation where you’re not able to communicate your consent or desires. For example, you can determine whether or not you’d want to be kept on life support if you ever become terminally ill.
An estate plan gives you the power to express what happens to you and your assets. If you’d like to learn more, join us on Thursday, November 8 from 6:00-7:30 pm for our free Estate Planning Seminar presented by Wills & Wellness Estate Planning. Register online to save your seat.