![]() Both of these should be “durable,” which means they remain in effect during a period of incapacity. (Be sure to consult your financial services provider about rules or limitations they may have concerning the acceptance of springing powers of attorney.) A power of attorney for health care (also known as a health care proxy), along with an HIPAA authorization and living will, allows someone to make health care decisions on your behalf. This can be effective immediately upon signing or upon “springing,” which means it goes into effect once you become incapacitated. However, a critical component of estate planning includes documentation in the event you become incapacitated.Ī financial power of attorney allows you to name someone to help with your financial affairs in the event that you are unable to manage them yourself. Many people think of estate planning as a process that needs to be done to prepare for what happens when you pass away. "These assets could be handled within a trust for the benefit of the minor, and a professionally managed trust could theoretically produce better results than an account entrusted to a nonexpert guardian who might mean well but might lack the experience or knowledge to properly invest and protect assets." "Trusts can make sense for most assets, including financial assets, retirement assets, real estate, and life insurance," Bleustein says. ![]() For assets that do not have a beneficiary designation, the will is the instrument through which to designate who will receive such assets, and it can detail any related special instructions.Īlthough a will is a cornerstone of estate planning, some people may need something more extensive, and, if so, a trust may be beneficial. In some states, a similar beneficiary designation can be added to real estate, allowing that asset to also bypass the probate process. For example, if a beneficiary is named in a transfer on death (TOD) account at a brokerage firm, or payable on death (POD) account at a bank or credit union, the account can usually pass directly to the beneficiary without going through probate, and thus bypass a will. If the owner also has a will, the directions in the will should be consistent with the directives provided to the financial institutions. Some assets can be distributed by the institution, such as a bank or brokerage firm, that holds them, so long as the owner has provided the proper instructions to the financial institution and has named the beneficiaries who will receive those assets. The age of majority in a given state is set by state laws generally, the age is 18 or 21. "But, while naming a guardian is important, it's just one step." In addition to a guardian who assumes responsibility for the care and custody of the minor child, a conservator (or "guardian of the estate") may also be necessary to manage any assets the minor child may inherit. ![]() "Drafting a will provides the opportunity for a parent to name a guardian to take care of a child if something were to happen to the parent," says Sander Bleustein, vice president of Advanced Planning at Fidelity Investments. How would the child be provided for if either parent (or both) were to die? Consider a young married couple having their first child. ![]() Especially significant is the birth of a child. A number of major life events help shape the need for and scope of an estate plan. ![]()
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