There are a number of important legal documents you should consider when developing your Estate Plan.
A Will is a document that directs what happens with your property at your death. In your Will, you name an Executor. An Executor can be one or more persons, a bank, or a combination of the two. The role of your Executor is to gather and account for all of your assets, file final tax returns, and ultimately distribute your net assets according to your wishes under the Will.
Durable Power of Attorney
A “Durable Power of Attorney” allows you to name an “agent” to handle your financial affairs (i.e. pay bills, manage assets, file taxes, etc.). In Iowa, a Power of Attorney can be made effective immediately or it can be set up to become effective only upon disability. Care must be taken in choosing your agent as there is typically no court oversight of their actions. If you become incompetent and do not have a Durable Power of Attorney, someone may need to petition the court to be appointed conservator for you. This process typically takes more time and is more expensive.
Durable Medical Power of Attorney
A “Durable Medical Power of Attorney” allows you to choose someone to make medical decisions on your behalf if you are not able to.
A “Living Will” is a written document that tells your doctor whether life-sustaining measures should or should not be taken in the event you become terminally ill or incapacitated. Alternatively, you can consider an Advance Directive document which will cover more options and more detailed end-of-life planning.
Revocable Living Trust
Under some circumstances, individuals prefer to avoid the court-supervised probate process by holding all of their assets in a Revocable Living Trust. Similar to a Will, a Revocable Living Trust allows you to direct what is to happen with your assets after your death. Unlike a Will, a Living Trust also allows you to direct what is to happen if you become incapacitated. Since it is revocable, it can be changed at any time prior to death or incapacitation. Individuals commonly name themselves as trustee during their lifetime and then name another individual and/or bank to serve as “Successor Trustee” to step in and manage their affairs if they become incapacitated and otherwise to wind up their affairs at death.
If you are utilizing a Revocable Living Trust, it is important to make sure all of your assets are held in the trust at your death. Life insurance, retirement accounts, and annuities are the exceptions. These assets are distributed at your death based on a beneficiary designation you would have completed. If you are hoping to avoid probate, it is important to review your beneficiary designations for these assets to make sure they are not payable to your Estate at death. If any assets are payable to your Estate, a court-supervised probate proceeding may be required.
You should consult with an Estate Planning Attorney to prepare your Estate Planning documents. Although it will cost some money, using a competent attorney will ensure that your wishes and goals are carried out. Things change over time. It is important to review your estate plan and beneficiary designations on a regular basis to make sure your plan still fits your situation and current goals.
We invite you to contact a Wealth Management Professional online or call 1-800-899-8858. We’d be happy to answer any questions about developing your Estate Plan or any other financial or retirement planning questions you may have.Some trust products and IRA contributions/balances are not a deposit, not FDIC insured by any federal government agency, not guaranteed by the bank and may go down in value.