When to Start Estate Planning: Tips on How to Get Started


Cloud cube with text about Estate Planning Gilbert AZWhen you read the words “estate planning,” it likely brings to mind the idea of property and significant assets. Thanks to the word estate, you may even picture Downton Abbey or its American equivalent.

In reality, estate planning is about much more than your financial assets. It includes the advance directives surrounding your medical care as well as your finances and property. Estate planning encompasses all of the choices you make for the future you, in the event of either your death or your incapacitation. And, with the gods of irony holding so much sway over our lives, it is never too early to begin making those plans.

5 Must-Have Estate Planning Documents

Arizona allows anyone age 18 and older to create estate planning documents. Your options are numerous, but at the minimum you want the following five:

  1. Durable medical & mental healthcare power of attorney
  2. HIPAA authorization form
  3. Durable financial power of attorney
  4. Living will
  5. Will

The durable medical power of attorney (POA) allows you to delineate your wishes as regards medical treatment, as well as name whom you want to make these decisions on your behalf in the event you become incapacitated due to illness or accident.

Even with an advance medical directive like a POA, you need the HIPAA authorization form. Typically, even those individuals named in a POA have difficulty dealing with healthcare and insurance providers without the authority of a HIPAA release form.

Your durable financial power of attorney names the person you want to handle your financial assets in the event of incapacitation. This includes paying your bills, managing your assets, running a business, or anything else you include in the POA. You decide what authority to give, and you decide whether to revoke it if anything changes.

A living  will allows you to make decisions regarding whether or not to sustain you on life support in the case of an irreversible coma, persistent vegetative state, or terminal illness. It also directs whether you want pain relief medication to be administered to you.

Your allows you to transfer property to named individuals at your death, name a guardian for your minor child(ren), and names the person(s) you want to manage your estate.

One item not listed above, but that is still important (especially for younger people), is life insurance, especially if you are married and/or have children. The younger you are, the less likely you are to have sufficient assets to sustain your family in the event of your death. Term life insurance policies are also more affordable for younger people.

How to Get Started

Even though estate planning is about more than assets, it helps to start by making a list of yours. This includes any real estate you own, vehicles, and other titled properties. Your list should also include:

  • Interest-bearing accounts, such as savings accounts and CDs
  • Financial investments, such as stocks and mutual funds
  • Retirement accounts, such as your IRA, 401(k), and pension
  • Life insurance and annuities
  • Valuable collectibles, including coins, antiques, jewelry, and art
  • Business interests and partnerships

Add the beneficiary name you choose for each asset. You want the full legal name, birthdate, and current address for each beneficiary.

In addition to assets, list any debts you have, such as credit cards, student loans, and secured and unsecured lines of credit.

Next, list the designees on any of your accounts, including your retirement and life insurance. Also, the join owner of any property, such as a spouse listed on titled property or joint checking and savings accounts.

If you have children, discuss guardianship preferences. Have a backup plan if your first choice says he or she cannot assume that responsibility. Do not forget pets when determining guardianship issues.

Talk to your attorney about potential tax liabilities. The vast majority of Americans do not need to worry about the federal estate tax. However, your attorney can advise you if your assets exceed the estate tax exclusion limit.

Choosing Executors, Agents, and Trustees

The person you name in your powers of attorney, needs to be a person you trust implicitly, whose judgment you respect, and who you feel sure will honor your wishes and fulfill the duties you assign to them.

Do not simply name an oldest child or family member. In addition, consider the beliefs of your agent, and whether those beliefs align with your wishes. For example, if you wish to not be kept on life support for an extended time, the agent named in your medical POA should be someone willing to honor that wish.

Let Your Family Know

Finally, the best way to avoid future issues is to share your wishes with your family and friends. Anyone named in one of your advance care directives needs to know (1) that you chose them as an agent and (2) what you expect them to do. This is the best way to ensure your wishes are honored.

If the time is right to begin your estate planning journey, contact the team at Cholewka Law for a free consultation.

If you have any questions that were not covered in this article, please post your comment below, we will respond promptly.

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