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Estate Planning 101: Four Documents to Help Protect You and Your Assets

October 22nd, 2014 | By Sandy Spring Bank

Barbara MulitzBy Barbara Mulitz, Esq., Vice President and Trust Officer

Hello Again!

In a recent blog, my colleague, Jennifer Cumming, discussed ‘Four Tips for Retirement Planning for Women.’ While Jennifer stressed that planning for a comfortable retirement is extremely important—especially for women—we also know that protecting those hard earned assets is of equal concern. We thought this would be a good time to remind everyone of the value of a strong and current estate plan.

So, what is Estate Planning? It is the coordinated effort, using legal documents, to appoint and direct someone (or a corporate entity) to manage your assets when you are unable to do so. A strong estate plan will give directions, to a specific individual, as to how to manage, preserve and ultimately distribute your assets. Estate Planning documents speak for you when you cannot.

There are four basic documents that you should include when planning for a time when you are unable to manage a variety of matters on your own:

  1. Last Will and Testament. The oldest and best known estate planning document, a Will provides you the opportunity to not only direct and determine the distribution of your assets, but also the ability to choose who will carry out those instructions. Please note, a Will is only valid and legally binding at your death. Prior to that time, you can change, amend and even revoke any Will that you have formally signed, as long as you are able and capable.
  2. Durable Financial Power of Attorney. This document provides you the opportunity to choose an individual to manage your financial matters when you are unable to do so. This document is only legally binding while you are alive, and it has no legal validity at your death.
  3. Revocable Living Trust. This document combines the best of the Durable Financial Power of Attorney, as well as the Last Will and Testament. This type of trust allows you to choosean individual or entity to manage your assets while you are living, as well as providing you the opportunity to direct the distribution of the assets at your death. This document is legally valid while you are living, and continues to be legally valid after you pass.
  4. Advance Directive. This document allows you to choose an individual to make healthcare decisions for you when are you are unable to do so. The individual who you select is called your agent. This personmay hire or fire your doctors; admit you to the hospital or release you; and make end of life decisions on your behalf.

With these documents legally executed, you increase your ability to protect and preserve your assets. How? By choosing capable individuals for the tasks at hand.

Choose someone who understands and shares your management goals, possesses expertise in the areas that you will need assistance, and knows how to work with a team of professionals to carry out your wishes. This will give you a higher degree of control over what will happen to your assets.

Finally, as you are selecting your “Dream Team” of professionals to help you reach your financial and retirement goals, we encourage you to equip them with a strong and current estate plan. Not only will you have taken a step toward securing your financial future, you will have given your team an opportunity to know—in writing—exactly what you would like them to do when their assistance is needed.

In the coming months, Laurie Kramer, Jennifer Cumming, and I will continue to discuss financial issues for women, including retirement planning, estate planning, and financial scams. We appreciate your comments, questions, and suggestions. Let us know what you think and how we can help. Look for us here, as we continue to share information through our blog, and look for opportunities to join our in-person seminars next year.

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