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Estate plan can save troublePosted by Randy on: 2005-10-01 18:33:11 in category:
Retirement Planning News [ Print | Permalink / 0 Comment(s) ] Estate plan can save trouble Provisions make financial transition simpler for loved ones By Kara McGuire The Minneapolis Star Tribune MINNEAPOLIS, Minn. - People often say that having children is what gets the estate-planning ball rolling. Well, if that's the case, then I'm about two years overdue. Depending on the complexity of your situation and whether you're married, single or have a family, creating a basic estate plan can cost anywhere from $300 to a couple of thousand. Brad Frank, attorney with Parsinen, Kaplan, Rosberg & Gotlieb, acknowledges that expense can be hard for young people to shoulder, "but for the peace of mind you get for the money I think it's a pretty good deal," he said. Frank should know. His parents passed away before he entered college. If it hadn't been for a well-planned estate, he might not have made it to college and law school. He uses his personal experience to convey the importance of having a plan. That goes for young people - even if they've been out of school for only a few years and aren't making big bucks. "It's emotionally hard enough when your loved one dies that you want to make it financially easy for them," Frank said. An estate plan allows a loved one to focus on grieving, not whether their name is on the bank account. Here are the three main pieces of a basic estate plan. Health care directive | A health care directive is the place to name a durable power of attorney for health care - the person you authorize to make decisions about your care when you're incapacitated. This part of an estate plan doesn't benefit much from the guidance of attorney, although most will do the heavy lifting for you if they're writing up a will. There are free and easy-to-use documents available online. Just make sure you use a form designed for your home state. Durable power of attorney | Like the health care power of attorney, the durable power of attorney is a document that names someone to manage your financial affairs, only when you can't. The key word is "can't." If you can communicate, then you're still in charge. Golden Valley estate planning attorney William Hansen chose his wife. "So if I became incapacitated and she needs to sell the house, she can sign on her own behalf and for me." If she weren't named agent in a durable power of attorney document, she'd have to go to court and be appointed his guardian. The will | This is where you give your Harley to your uncle and name your college roommate to raise your kids. It's where you spell out who gets your money and how. And it's where you name an executor of your estate, a fancy way of saying a person you trust to oversee "Operation Give Away My Stuff." Sounds easy enough to write a list of what you've got and where it goes, but Earl Cohen, an attorney with Mansfield, Tanick and Cohen, said he's seen a lot of online templates he calls backward. Cohen suggests checking with your company to see if it has a lawyer or firm who would work with you at a discount. If that doesn't find you a legal ace, ask for personal recommendations. Or enter your ZIP code and click on estate planning at www.findlaw.com. If you're a die-hard do-it-yourselfer or truly can't afford a pro, there's the book "We the People's Guide to Estate Planning," by Ira Distenfield, Linda Distenfield and Bill Lockyer. Also, there are guides from the reputable legal self-help publisher Nolo (www.nolo.com), as well as will-making software like Quicken Willmaker and Kiplinger's WillPower. Once you have prepared these three documents, you're still not finished. Make sure that your beneficiary information - the person who "benefits" from getting your retirement money or life insurance payouts - is up to date. Even if you don't muster the energy to create an estate plan, take the time to do this, especially if you've recently married, divorced or have made a long-term commitment to a partner. And review these documents every five to 10 years. It's then that you might want to look into various trusts and other ways of avoiding probate, the process of having the court review your estate to make sure everything's in order. Probate has been painted by both consumer advocates and lawyers as a time-consuming and costly nemesis for your heirs. But it can be costly to set up an estate plan with tools to avoid the system. For this reason, Hansen said he rarely recommends that young people worry about probate. Getting them to think about a basic estate plan is a good first step. 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