Blum says there are three aspects of good estate planning: preserving, managing and distributing assets. Here’s what you need to know:
PRESERVING ASSETS: “You want to do things that will help to protect against loss of assets to creditor claims,” Blum says.
One tool for protecting assets is a family limited partnership, which pools a family’s assets. Such a partnership is frequently used to minimize estate tax and to protect against creditor claims.
The bottom line is that “you’re trying to preserve the biggest possible base of assets to pass along to your family,” Blum says. “So you want to think about things you can to do to protect against creditor claims and things you can do to save on taxes.”
MANAGING ASSETS: Ask yourself who will step in and manage your affairs if you’re disabled or deceased.
It’s critical that you choose the right person because if you don’t, you could end up having your assets mishandled.
Among other things, you will need a durable power of attorney that authorizes someone to manage your financial affairs if you’re unable to do so.
“With this document, your spouse or other named person can access your checking account, buy or sell stocks in your brokerage account, buy or sell your house, your car, your business or other assets,” says Murphy, of Murphy & Sylvest. “It is a very powerful document, and you should be very careful whom you name.”
The other documents you need have to do with health issues. These are:
—Health care power of attorney: This designates someone who can make medical decisions on your behalf if you’re unable to communicate your wishes.
—HIPAA waiver: HIPAA stands for the federal Health Insurance Portability and Accountability Act, which makes it easier for people to protect the confidentiality and security of their health care information.
The waiver enables you to designate who is authorized to speak to your doctors and other medical providers if you’re unable to do so.
—Directive to physicians: This document is also known as a living will or an advance directive. It clearly states your wishes about life-sustaining treatments when you reach the point that you can no longer decide for yourself.
“Some people want this and some don’t, but it can relieve your loved ones of guilt should they be in a position to make this decision,” Murphy says.