Thursday, July 10, 2014
After graduating from college and entering the coveted “real world,” drafting an estate plan is not necessarily on the top of everyone’s to-do-list. However, after starting your first job, preparing an estate plan is vital. Below are five documents that should be part of your estate plan:
- Durable Financial Power of Attorney. This is where you name an agent to act on your behalf concerning your personal financial affairs. Generally, your agent would step into this role if you were unable to handle your own affairs. This can be a family member, a close friend, or a private fiduciary.
- Health Care Power of Attorney. This is similar to the Financial Power of Attorney, except it is used for decisions concerning your health care. You must name an agent who can assist with placement, if you must be moved to a rehabilitation facility, and is often given the authority to follow your wishes regarding life-sustaining treatment.
- Last Will and Testament. A will allows you to provide to whom and in what manner your assets will be distributed upon your death.
- Beneficiary Designation. Make sure there is a beneficiary designation on your 401(k)s and IRAs. A beneficiary designation states that upon your death, the assets held in that account pass immediately to the named individual. If you do not have a beneficiary designation, the funds will be distributed as part of your estate.
- Beneficiary Deed. This allows you to name an individual who will receive your interest in real property at your death. If you are married, a beneficiary deed would only be used at the death of the second spouse. There are times when use of a beneficiary deed may not be in your best interest (i.e., if you want the property to be distributed to minor children.)
See Amber Curto, Five Estate Planning Documents Every Young Professional Should Have, Nat Law Review, July 7, 2014.