Basics of Estate Planning

Podcast Transcription

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Hi everyone, welcome to another episode of PFCU’s Money Talk Podcast, I’m your host, Maddy. Did you know that 68% of Americans do not have a Will or other estate planning documents? This is because the process is often viewed as complex and expensive. So today I not only wanted to highlight a new solution that PFCU has for estate planning but also talk about some frequently asked questions about the estate planning process.

So, like I said, PFCU is now offering estate planning, you can get more information and get started on our website. At pfcu4me.com, under the services tab, you will see “estate planning”, you can also just search for it in the search bar. There are a few different options, you can pick the one that best fits your needs. And I think once you see how easy this site is and how it walks you through step-by-step, you will immediately feel more at ease with the whole process because it can definitely feel overwhelming.

Now let’s dive into some questions that often come up as it relates to estate planning. I hope this helps you understand some of the terms and how the process works, and this information is provided by Legal Karma. And I’m going to give you a heads up before I go into this, is that there’s going to be quite a bit of information. So, if there is a specific question you’re looking for, feel free to fast forward through this to try to find the answer to your question. And if you still have questions, Legal Karma has a whole team to help, you can call 616-727-8849.

So, question number 1, what is estate planning? That’s a good place to start, right? So, it’s the process of preparing for and creating legal documents that provide the opportunity to name and authorize trusted loved ones to act on your behalf, such as making financial and medical decisions, when you are unable. A typical estate plan also provides the opportunity to create a legacy plan for the distribution of your assets when you pass.

So, who needs estate planning? Every adult may benefit from some form of estate planning. Having a plan in place provides comfort and confidence in knowing that if the unexpected happens, your trusted loved ones will know your wishes and be empowered to carry them out.

Documents that are typically included in an estate plan? The most common being a Will or Revocable Trust, General Financial Durable Power of Attorney, Medical Power of Attorney, Advance Directive/Living Will, HIPAA Authorization, Declaration of Appointment of Guardian, Appointment of Agent to Control Disposition of Remains.  That was a mouthful. So, there’s a whole list of the purpose of each of these documents and I’m not going to go through each and every one of them. If you want to look more into what these documents are and the purpose of them, visit our website, pfcu4me.com, and go to the estate planning page. It’s going to list all of these out. I’ll go through a few of them.

So, the first being Last Will and Testament. This document defines how your estate will be distributed (who inherits what) and appoints the person who will handle your final affairs.

The General Durable Power of Attorney allows your named agents the authority to make financial, property, and investment decisions in the event you become incapacitated.

Your Medical Power of Attorney gives your named agents the authority to make health care decisions in accordance with your wishes in the event that you are unable to make decisions yourself.

HIPAA Authorization gives authorization for your physician or medical entity to disclose your health information to your designated representative.

During your lifetime, you serve as the Trustee of your own Trust, retaining control over the assets titled into your Trust. A Revocable Trust provides you the opportunity to name who will continue on as successor Trustee of your estate when you are no longer able. The Trust provides authority and direction for how and to whom your assets and personal property will be held or distributed.

Okay, that was a whole mouthful. I’m not going to go into too much more when it comes to these documents. Like I said, please visit our website if you are unsure about what any of them are

So, what is the difference between a Will and Revocable Trust? The difference is that a Will details who gets what and a Trust provides who gets what and how. The difference is the amount of control desired in order to fulfill your wishes and intentions.

Probate is the legal process of administering your estate after you pass. This court process involves identifying and valuing your assets, paying any outstanding debts, and distributing the remaining assets to the heirs. This primarily applies to individuals who only have Wills in place or nothing at all.

The difference between a revocable and irrevocable trust is that a revocable trust, this can be changed or revoked by the person who created it as long as they are competent, while an irrevocable trust usually cannot be changed or revoked except in very limited circumstances and with court permission along with approval of all beneficiaries.

So, here’s a question you might be asking, do I need an estate plan if I don't have many assets? I think sometimes we think, only people who have a lot of assets need an estate plan. The answer to this is yes, everyone can benefit from having an estate plan, regardless of the size of their estate. An estate plan ensures that your assets are distributed according to your wishes and can also provide for your care in the event that you become incapacitated.

Can you make changes to your estate plan and how often should you update it? Yes, you can make changes to your estate plan at any time. It’s actually recommended to review it every three to five years. And it’s also important to keep it up to date with any changes in your life circumstances, such as the acquisition of new assets, the birth of children, or changes in your health.

So, let’s say you go through, you get all the documents, you download them. What are the next steps? Your estate plan will be emailed to you directly. Along with the documents, you’ll receive written instructions for signing and notarizing the documents in your package. Once the documents are signed and notarized, make sure that you make copies to share as needed and store the originals in a safe location such as a safe deposit box or maybe a safe at home, somewhere that’s secure.

Okay, you’ve done your estate planning, now should you inform others that you have created an estate plan? The answer to that is yes. Letting your loved ones know that you have created a plan, and where to find the documents if they need to act on your behalf, can eliminate confusion and further disruption, especially in these difficult times. However, it is entirely up to you if, whether, or how, you share your information.

So, we go through all this information, now what happens if you die without an estate plan?

If you were to die without an estate plan, your assets will be distributed according to the laws of your state. These laws may not align with your wishes. This can result in your assets going to unintended beneficiaries and can also lead to disputes among family members.

I hope answering some of these common estate planning questions was helpful and not too overwhelming. Check out our website again for more information and look at our solutions for estate planning. For further questions, you can contact Legal Karma’s team at 616-727-8849. Thank you guys for listening!

Money Talk is a podcast brought to you by PFCU. PFCU offers many products and services to fit your needs. From our various loan and account options to our team of financial coaches to help you reach your goals. Make sure to take advantage of the many conveniences PFCU offers, such as the mobile app, mobile wallets, bill pay, and more. Visit our website at pfcu4me.com to learn more. PFCU is an equal housing lender and is federally insured by the NCUA.