With the recent passing of Prince, estate planning has been a big topic in the news. It’s surprising that Prince didn’t have a will or trust, given how much he liked to be in control of his music and how private he is. No one likes to think about death, but it’s crucial that your assets be dispersed in accordance to your wishes.
In this post, I’m going to outline the documents I have in place for my estate planning and why I think each one is necessary. Let me preface by being very clear that I’m not an attorney and these are not recommendations, only an explanation of what I use myself. I created these documents in 2010, just before my 34th birthday.
The most basic estate plan includes a will and I have one as well. It’s very basic, simply stating that I don’t have kids and I’m not leaving anything to anyone claiming to be my child. From there, my will states who I want to leave my property to. An executioner is named, to carry out my wishes and I’ve chosen someone other than my beneficiary to make sure nothing is overlooked. I view this document more of a formality than anything.
It’s important to note that any beneficiary you have listed in your investment accounts supersedes the beneficiary in your will. This is actually good news, since it’s easier to update your beneficiary in these accounts than in a will. Just make sure to review this often to ensure the money goes to the person you intend.
This next document is somewhat controversial, as there are many people who believe it isn’t needed: a revocable trust. The main purpose of a trust is to avoid probate and ensure that the details of your estate are kept private. But there’s one feature that is incredibly important for people who are single and that’s the incapacity clause. This allows the person I name to act on my behalf should I be incompetent to do so (e.g. I’m in a coma). This allows that person to make choices about my medical care and finances when I am unable to do so. Without this, doctors would be allowed to make choices based on what they think is best, rather than someone who knows you.
But the financial power of a trustee named in an incapacity clause is limited only to the assets that fall under the trust. Because of that I also have a power of attorney. This person has access to all my finances if needed, to ensure bills get paid and other financial transactions occur if I’m unable to oversee them. As someone who is single, it’s important for me to name the person I trust to take over my finances.
The last document I have is an advanced directive and durable power of attorney for health care. This document outlines my end of life wishes and allows a named POA to make decisions for me. No one wants to think of the worst case scenario but it’s important to make sure that a plan is in place so your loved ones aren’t left wondering what you’d want them to do. The last thing I want is for my family to feel guilty about pulling the plug, so I’m trying to make that choice easier if, God forbid, it has to happen.
All documents are signed by me, two witnesses and a notary public. My parents have copies, and my primary care physician has a copy of my health directive. All my documents currently list family members as beneficiaries and POAs, since I’m fortunate to have close relationships with them. These will most likely be updated as I get older and circumstances change.
A note about life insurance: I don’t carry any kind of life insurance because I don’t have anyone who is dependent on my income besides me. I also don’t carry any debt but if I did AND there was a co-signer, that co-signer would want me to have life insurance and be named as the beneficiary of the policy. An example of this is when I was in college and had student loans. My parents had a small life insurance policy taken out on me in case I passed away before the loans were repaid. This ensured that the policy would pay for the loans instead of them.
Have you thought about estate planning? What kind of documents do you have in place?