When we think of “estate planning,” many of us immediately picture a last will and testament. Who gets what? Where will my assets, and my other stuff go? Once that’s decided, isn’t the planning complete?
What happens if you’re still alive, but unable to make financial decisions? That’s where a durable power of attorney comes in. It allows someone you trust to manage your financial affairs on your behalf.
What if you can’t make medical decisions for yourself? In that case, you should have an advance health care directive (also known as a health care power of attorney) in place to designate someone to make medical decisions for you. We also recommend providing guidance regarding end-of-life desired care using resources such as 5 Wishes or Your Way to clearly communicate your preferences.
The most important aspects of estate planning involve decisions while you are still alive. As time passes, life changes, circumstances shift, people evolve, and new seasons begin. These life transitions should either be anticipated through flexible estate documents or addressed promptly after they occur.
Let’s examine some common life transitions that can significantly impact your estate plan:
In the event of incapacity, your power of attorney and health care proxy step in to manage financial and medical decisions. What if the people you named are no longer the right choice? For example, you named your brother as your financial agent 10 years ago, but now he is aging and facing health challenges of his own. Or perhaps you chose your daughter, a nurse, to make medical decisions for you and now she’s dealing with substance abuse problems. These are real-life changes that may require updates to your estate documents to ensure the right people are still in place to act on your behalf.
One of the most difficult topics to consider is the loss of a child. If your adult child has children of their own, does your will specify that their share passes pro rata down the bloodline to their children? And if those beneficiaries are still minors, does your plan establish a trust to manage the inheritance on their behalf?
If someone goes through a divorce but the will still states, “upon my death, all goes to my spouse,” that clearly needs to be updated. Similarly, if the former spouse is still named as the financial and health care agent, those designations should be revised as well. It’s also essential to review all beneficiary designations such as those on 401(k)s, IRAs, life insurance policies, etc. to ensure an ex-spouse is not inadvertently left as a beneficiary or heir.
While we haven’t covered every possible life transition, one thing is clear: estate planning documents created at a single point in time require continued monitoring. As life evolves, documents may need to be updated or replaced to reflect new circumstances.
You made thoughtful decisions based on what you knew at the time. Your financial advisor can assist identifying when a life event may require a review of your existing estate plan. Your Apella Advisor is here to support you through that process.
Disclosures:
Apella Capital, LLC (“Apella”), DBA Apella Wealth is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration with the SEC or any state securities authority does not imply a certain level of skill or training. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
No current or future client should assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. As with any investment strategy, there is the possibility of profitability as well as loss.
Apella Wealth does not provide tax or legal advice and nothing either stated or implied here should be inferred as providing such advice.