As we head deeper into 2023, now is the time to reflect on the past year, and to set aspirations for the year ahead. This time around, however, instead of making the same old weight loss, exercise, or eating healthy resolutions, focus on a resolution committed to safeguarding your personal and financial affairs. This year, let your New Year’s resolutions be a commitment to your estate plan.
Estate planning is the process of managing your affairs to ensure they fall into the right hands if you become incapacitated, or in the event of your death. There is a misconception that estate planning is just for the elderly or physically ill. This is far from the truth, and there are so many benefits to nailing down your estate plan sooner than later.
Resolution #1 – Get Educated
Estate planning is about more than just what happens after you die. Unfortunately, many people don’t understand that. Instead, people procrastinate when it comes to estate planning, altogether sidestepping an uncomfortable conversation about their own mortality. However, estate planning is also key to protecting your financial and medical welfare while you’re still alive. This year, reframe your perspective and think of estate planning as planning for life…not death. Estate planning is a key component to preparing for things like retirement, aging-in-place, college expenses, illness, and incapacity. The steps you take to establish a safety net now will only help you enjoy life to the fullest for all the years to come.
Resolution #2 – Documents
You can have a plan, but an estate plan that doesn’t include the proper documents will not get you very far. Here is a list of must-have documents, and if you are missing any (or they are outdated) it is time to make some updates.
Last Will and Testament
A Last Will and Testament dictates who will serve as the executor—or personal representative—for your estate, what power they have, and what they will be responsible for after your death. The Last Will and Testament also identifies how, when and to whom your assets or property will be transferred.
Living Trust
A Living Trust, also known as a revocable living trust, is a legal document that allows the transfer of assets in a trust to your beneficiaries without needing to go through probate court proceedings.
Durable Power of Attorney
Durable Power of Attorney may be one of the most important documents in your estate plan. This document gives someone else the power to legally represent you and act on your behalf in financial matters. Being “durable” means that the authority of the individual you have assigned remains, even if you become incapacitated. The power of attorney stays in effect until you die, or revoke your agent’s power.
Advance Health Care Directive
Complimentary to your Durable Power of Attorney, an Advance Health Care Directive addresses your healthcare when you can’t make your own decisions. An Advance Health Care Directive combines what is sometimes known as a Living Will (or instruction directive) and Health Care Power of Attorney (or health care proxy) to record your treatment preferences and name your health care advocate in one document.
Resolution #3 – Choose an Agent, Trustee, and Executor
An agent under power of attorney, trustee, or estate executor, is someone who you fully trust to manage specific duties in the administration of your affairs, trust, or estate. The people you choose should have the skills, availability, objectivity, and fortitude to advocate for you and your loved ones when you’re sick, injured, or absent. For example, a good trustee is impartial towards the interests of the current and future beneficiaries. They should also communicate proactively with all of your named beneficiaries, while prudently investing trust funds, and managing trust property. Deciding who you want to fill these shoes can be a tough decision, but appointing a professional fiduciary today, can provide peace of mind and confidence tomorrow. A professional fiduciary is expected to provide the utmost level of care, and have a wide breadth of financial experience, which is crucial when dealing with complex financial and legal matters. Hiring a professional fiduciary helps alleviate the burden that aging often leaves behind and reduces the potential for family conflict, while ensuring that the assets you’ve worked a lifetime to accrue are distributed exactly as you wish, in a manner that is aligned with tax breaks and other important benefits.
Contact Santa Barbara Fiduciary
As you make progress towards reaching your estate planning resolutions, you’ll be faced with some challenging decisions. Let us help make those decisions a bit easier! Contact us to schedule a consultation and learn more about how Santa Barbara Fiduciary can help safeguard your life’s work.
