Estate Planning: It’s not just for the wealthy
- At August 4, 2011
- By ReplusMN
- In Estate Planning
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At one of our recent retirement education seminars, an attendee upon seeing the evening’s topic of Estate Planning commented, “you have to have one (estate) to worry about planning for it, don’t you?” My emphatic answer was, “No!”
Yes, you need to have a significant estate before you need to worry about estate tax and planning for that (Federal tax kicks in at $5 million; each state is different), but there are pieces of planning that everyone needs—starting at age 18. Although many of us may look at estate planning initially when we first seriously plan for retirement, there are reasons to take some action long before that. Often when we engage in true estate planning, we also look at health care directives and powers of attorney.
Health care directives (aka, living wills, health care powers of attorney, etc.) set up who you want to step in for you if you are ever in the situation where you are unable to speak for yourself to make a health care decision. Parents who have attempted to follow up on health insurance claims of their children in college know that they must receive permission from their children even for this situation. What if your child were in an accident and unconscious? A health care directive would give permission for the named person/s to approve medical procedures. You usually think about this more as you approach the age when serious medical conditions could render you unable to speak for yourself (stroke, Alzheimer’s, unconscious from heart attack, etc.).
Powers of attorney apply to financial decisions. If you were incapacitated and needed to pay hospital bills, the appointed power of attorney could access your bank account to take care of that responsibility for you.
Obviously, setting up health care directives and powers of attorney require thoughtful decisions, but they should not be left undone because you believe you do not have enough savings to warrant estate planning. Googling “estate planning” and your state should give you some fairly simple resources to investigate the basics of these documents for where you live.
Remember, when you are starting to plan for retirement should not be the first time you think about this piece of estate planning—maybe it should be at high school graduation!
