Tom: This morning we have a bit of a serious topic: estate planning.
Mellody: Obviously, no one likes to think about their own mortality, but I don’t see this as a dark topic. Rather than taking the negative view of this, you should consider all of the positive outcomes of that task, such as ensuring that loved ones are able to benefit from your generosity, and protecting them from the difficulty of sorting everything out when you are gone.
Tom: First things first: what makes up your “estate?”
Mellody: Great question. A lot of people hear estate and think it is only for well-off individuals, but it isn’t. In legal terms, an “estate” is simply all the property individuals own, both outright and jointly – including real estate, investment and bank accounts, cars, personal belongings, even your pets!
Tom: What happens if you have not planned?
Mellody: If you don’t make any formal estate plans, then decisions about your property, you medical care and your final arrangements will be made by others. Property will be divided and distributed at your death according to the process specified by state law. Any medical decisions will fall to individuals specified by law as well. And the decisions made may not reflect your values or your priorities.
Tom: So what do we need to do?
Mellody: There are two key documents that you have to draw up: a living will, and a last will and testament. A living will dictates your medical wishes if there is an emergency and you cannot communicate your wishes, including decisions about life support. A living will can also allow an autopsy, organ donation and dictate whether you wish to be buried, or cremated, or other options. Most financial actions will fall into your last will and testament. A last will and testament spells out how your assets will be distributed and utilized following your death.
In your last will and testament, you will want to specify a number of things. They include:
1) what property and assets you wish to leave to family, friends, or charities, and how they will be distributed. You have to be specific here. If you want to pass along your grandmother’s earrings to your daughter, spell it out.
2) who you wish to act as guardian for any dependent children. If you have children you should talk to this person and get their permission before putting them in your will.
Monday Mondays: Why Estate Planning Is So Important was originally published on blackamericaweb.com