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When Do I Need an Estate Plan?

When do I Need an Estate Plan? I am asked this question frequently, and the answer is: it depends. Every adult needs a Durable Power of Attorney, and Advance Healthcare Directive, and a HIPAA release. Having these legal documents, regardless income level or value of assets, is critical. Name someone you trust completely to act as your “Agent” if you are very ill, have a serious accident, or need someone to speak/act for you if you are incapacitated. Without these legal documents, no one can legally act on your behalf. And these legal documents are complex. They should not be generic forms from the internet, because too much is at stake if you need the help these legal documents can provide.

When do you need a Living Trust or a Will? Again, it depends. Many assets can pass after death by way of beneficiary designation, so make sure your IRA’s, 401(k)’s, annuities, life insurance, and similar assets have beneficiaries listed. Failing to name beneficiaries is a big mistake, which can result in the probate court sorting out your estate.

For some people, the beneficiary designations will ensure their assets go to who they want, without the court. But once you have other assets (like real estate) or situations (like minor children or more than one beneficiary), then a Living Trust is likely the way to go. Each person’s situation is different, so it’s important to get proper legal advice with these important decisions.

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