Estate Planning
Estate planning sounds like it’s meant for the uber rich, right? Well, not really. There are many components that go into estate planning, and I admit that I only know what I know. I’m sure there are a million different ways these things can be crafted and a million questions a lawyer can answer for you. The reason I even looked into creating an Estate Plan is because Cisco provides legal services as an optional benefit. I pay a minimal amount every paycheck, which gives me the opportunity to work with a lawyer at a reduced or no cost for covered services. I feel grateful for that, because I may never have taken the opportunity to create one otherwise. And, it feels nice knowing that anything that I have worked hard for during my life and career will be handled in the way that I choose, once I am no longer here.
If someone has a small amount of property or other assets (money, investments, a home, etc.) it’s a good idea to think through where those things should go if and when something happens to them. If you have children, you can ensure that you have the right guardianship setup for them. Have you ever thought about what you want your family to do with your body when you die? (I know that is morbid.) All of this can be addressed in an Estate Plan. I will go over the details of my plan below, but please remember that I am not a lawyer, and I only know the basics based on what was crafted for me.
These are the several components we created for my Estate Plan:
Living Trust: this document details how I want my assets (cash, investments, hopefully a home or property one day) to be given to my beneficiaries (a Beneficiary is the person receiving any items). I am the Grantor, meaning I created the trust and can change it as I see fit, since it is a revocable trust (an irrevocable trust cannot be changed once created). I am also the Trustee, because I manage it while I am alive and able. My Successor Trustee will manage the trust once I am no longer alive or if I become incapacitated.
Last Will and Testament: also known simply as a Will, is similar to a Trust in that it details how assets should be allocated to your beneficiaries. The Executor is responsible for executing the instructions of the Will (mine is the same person named as the Successor Trustee of my trust). The Will that was created for me is called a “pour-over Will",” and it acts as a safeguard for my Trust, i.e. if I forget to add any asset to my trust, my Will states that those assets should be treated as though I did add them to my Trust. Additionally, my Will states who will become guardian(s) of my children if I am no longer around. Some of the main differences I’ve learned about a Will, as compared to a Trust:
A Will must go through the probate process after you die, meaning it will go through a court proceeding before allocating your assets, which can cost money and time. A Trust is more private, since it doesn’t have to go through the court system.
A Trust can be more flexible in determining how you want your beneficiaries to receive the assets, i.e. 25% at age 25 and the rest at age 30, or you can add stipulations like the beneficiary must be sober or go to college, etc.
A Trust allows for more control long-term, whereas a Will may present some difficulties for the Executor to manage assets over an extended period of time.
Power of Attorney (Property / Personal Affairs and Healthcare): these directives give an Agent the authority to make decisions on my behalf. One agreement was specific for Property and Personal Affairs and the other was a Healthcare Directive. The healthcare directive gives guidance on whether I want to prolong my life in the case of a severe medical condition (i.e. using extraordinary measures to keep me alive) and it details if and how I want my organs to be donated.
Final Disposition Authorization and Instructions: this states how I would like my body handled after I die (i.e. cremated, buried, any special requests or arrangements).
I believe these items cover the basics of an Estate Plan, but I would be curious to know if others have additional, specific directives that they have found beneficial to their Estate Plan. These items at least give me peace of mind knowing that I have thought through these decisions for when I am no longer around. Best case scenario is that I will be alive and well for many decades to come, but life is never guaranteed. And, like I mentioned in my post about Emergency Preparedness — it’s just a good idea to think these things through so you are not caught unprepared.
