When it comes to estate planning many people do not understand the complexities involved. Below are five tips you should consider throughout your estate planning process.
1. Be Aware of the Beneficiary on Your Life Insurance Policy
Insurance in South Carolina is a non-probate asset, which means your assets are made payable directly to a beneficiary instead of passing through your estate. Why is this important? It is important because when someone passes away, that designated beneficiary can go and get the money from your policy immediately. If you have a beneficiary like an ex-wife named in your policy, then that person can obtain the money from your policy despite what your will might say. Therefore, I always advise my clients check the beneficiary on their insurance policy.
2. Know Your Life Insurance Limits
When reviewing or setting up a life insurance policy, always consider what type of policy it would take for your loved ones to be able to live at a reasonable standard at the time of your death. This is the best way to ensure your family will be taken care of once you are gone.
3. Prepare Your Will
A will is a very easy and inexpensive way to plan your estate. Having a will gives you a great peace of mind in terms of what will happen to your assets when you pass away. Your will can address your property, bank accounts, stocks, bonds, and some people even include instructions in terms of care provision for their children. A will is a vital component of good estate planning. If you do not have a will, then your assets might be passed through intestacy where it is subject to whatever the state statutes require in terms of how your assets be distributed. If this happens, your assets may not be distributed as you would like them to be. For example, if you are married and have children then your wife would get half and your children would get half. Some people prefer that when they die their spouse gets it all. Those types of issues would be controlled under the provisions of a will.
4. Prepare with a Power of Attorney
Power of Attorney is a document that allows an attorney in fact or an agent to act on your behalf. The Power of Attorney can sign your name on a check, deed, or lease and handle any affairs necessary on your behalf even if you are incapacitated. This document is very beneficial because if you ever get sick, hurt in an accident, or become incapacitated, then someone can handle your affairs. The only drawback to a Power of Attorney is that it is a fiduciary document. This term means that you would give someone authority to act on your behalf and have the expectation that they will act in your best interest. In choosing someone to be your Power of Attorney, you need to pick carefully. You will want to make sure it is not someone that could possibly exploit you. In the right hands, this is a very good document to have for the planning of your estate.
5. Prepare a Healthcare Power of Attorney
A Healthcare Power of Attorney is the same principle that we discussed with the Power of Attorney. The only difference is the Healthcare Power of Attorney relates more to your medical needs. A classic example of when a Healthcare Power of Attorney is needed would be when someone is incapacitated or hooked up to a ventilator. At this time the family is trying to determine what the next steps to take would be. The Healthcare Power of Attorney deals more directly with that type of scenario. Through the Healthcare Power of Attorney, you would designate an agent and that agent would document what you would like to happen if you were unable to speak for yourself. In the instance that your family was trying to figure out whether they disconnect a ventilator or remove the feeding tube, there would be some guidance provided in that Healthcare Power of Attorney so that your family would know what to do. This information would make it a lot easier on your family.
Each of these tips are a good starting point for estate planning. If you have not started estate planning, we highly recommend that you start looking into the options above. If you are interested in beginning your estate planning, you can contact us here at Finklea Law Firm for a free consultation to meet your Estate Planning needs.
~ Charlie J. Blake, Jr. (May 2019)