Originally published in the January 2018 issue of Madison Living magazine.
The holiday season was practically invented for families to reunite, eat, drink, and discuss controversial topics. I can only imagine the subjects covered in Madison homes this year: politics, religion, Eli Manning’s benching, Matt Lauer, the president’s Twitter account. The list goes on.
However, there’s one topic I bet your family didn’t discuss at the dinner table: estate planning.
Estate planning protects your loved ones if something ever happens to you. Though it may not seem like a “gift” in the traditional sense, planning for the unimaginable is more valuable than anything under the tree this year.
To the young folks starting families: You don’t have to be a millionaire to have an estate plan. It’s about more than just the money. An estate plan gives you peace of mind that your child’s lifestyle is also protected in the event of a tragedy.
At the bare minimum, each spouse/parent should have the following:
• Living will (aka medical directive)
• Power of attorney (POA)
• Simple will with testamentary trust language
A living will outlines wishes in the event you’re medically unable to make decisions, especially when it comes to end-of-life care. You can also establish a medical power of attorney to make decisions for you.
The power of attorney has the authority to act on your behalf while you are alive. Spouses typically name each other power of attorney for legal, financial, and medical decisions. However, you should name a secondary power of attorney in case your spouse is unable to fulfill that responsibility in a moment of need.
Now, on to the will. Testamentary trust language establishes a family trust that activates after you die. If both parents die at the same time, assets would go into this trust for the benefit of the minor child (or children).
You must designate an executor, guardian, and trustee to take care of business after you die. All three roles can be played by the same person, or different people. Each role requires its own personality and skill set, so this decision is entirely up to you.
The executor is that detail-oriented, Type A personality who will obtain your will, marshal the assets, close bank accounts and credit cards, re-register your bills, get the assets into the trust, get the house sold, do all the logistical stuff that follows a death.
The guardian is that loving, wonderful person who will commit to raising your children in as close a fashion as you would have. Your children will live with this guardian until they are 18 years of age. The trustee is the financial manager of the trust. They run the investments, and dole out the money.
If you’re still unsure about estate planning, ask yourself one simple question: If you disappeared today, would your family know what to do next?
Before we wave a final goodbye to the 2017 holiday season, give one more gift to your loved ones: long-term security. Schedule an appointment with the Bodnar Financial team today.