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January 12, 2024

Estate Planning Elements

Financial Planning Committee

Estate planning is an important part of the financial life planning process. Whenever a material change occurs in your life, it’s advisable to consider how your estate plan might be affected and whether you should update your estate planning documents.

There are several key documents you should have in place that define your wishes regarding your assets upon death, the care of your minor children, and how you would like your affairs to be handled in the event you can’t advocate for yourself. Here are the documents generally included in an estate plan and the important roles defined within them:

  • Last Will and Testament: A Last Will and Testament, more commonly called a Will, is a document that names the beneficiaries of your property, the personal representative of your estate (sometimes referred to as executor), and the guardian of your minor children. Your personal representative will be responsible for managing your estate, paying your debts and taxes, and distributing your assets according to your Will. The named guardian is the person who will take care of your minor children and their property until they reach adulthood. Your Will is executed through a process known as probate, in which your local court oversees the distribution of assets per your wishes.
  • Trust: A Trust is a legal entity that holds assets for the benefit of one or more beneficiaries. You can create a Trust during your lifetime—known as a Revocable Trust—or through your Will. Your trustee is the person who manages the Trust assets and distributes them to the beneficiaries according to the trust terms. The Trust is not subject to the probate process, so it can provide more control, privacy, and flexibility than a Will as well as potential tax benefits.
  • Power of Attorney: A Power of Attorney is a document that authorizes someone to act on your behalf in financial or legal matters. This person is known as your attorney in fact, or agent, and once you have granted them this authority, they can make decisions and transactions on your behalf in any matter as if they were you. Having a Power of Attorney in place is critical if you become incapacitated and need someone to manage your financial life while you are unable.
  • Health Care Directive: A Health Care Directive is a document that expresses your preferences for medical treatment and end-of-life care. The document states what kind of care you want or don’t want in certain situations and names a health care agent, who can make health care decisions for you if you are unable to do so.

We recommend reviewing your estate planning documents every three to five years or more often if there are major changes to your life or property. Changes can include the birth of a child, a minor child becoming an adult, marriage or divorce, or the death or relocation of one of the named parties serving in these roles. It’s important to give a lot of thought to who you will ask to serve in these various roles. It’s not uncommon to name different people in these roles depending on their relationships to you and your family.

Discuss your wishes with your chosen parties before signing your updated documents and make sure they are comfortable serving in these roles if needed. Then, share the updated documents with the professionals who help you manage these aspects of your life. This may involve your attorney, financial advisor, primary care physician, or other relevant parties. If you have questions about estate planning documents, speak with your JNBA Advisory Team.

Clearly defining what happens to your assets after your passing can be profoundly beneficial to your loved ones during the mourning process. This topic was discussed in a recent episode of Navigating Life Transitions, a podcast by JNBA Financial Advisors. You can find the 24-minute episode about “Leaving a Legacy” here.

JNBA is not an attorney and no portion of the above should be construed as legal advice. All legal issues should be addressed with the legal professional of your choosing.

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from JNBA Financial Advisors, LLC.

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