A financial plan often includes an IRA or a 401(k), a savings account for quick access to cash, life insurance and investments. But most people neglect to include another important aspect of their financial future: an estate plan. Not having an estate plan could lead to significant financial losses for you and your loved ones.
Why do I need an estate plan?
Having an estate plan can save your heirs money. It also helps you and your loved ones avoid stress and heartache. A will, a trust and a power of attorney are three vital estate-planning documents that will provide for the future needs of your family and other loved ones. Let’s take a closer look at them:
A will
You’ve worked hard for what you have. A will lets you preserve your wishes about what to do with your assets when you die. If you want your home, money, property, stocks or other things of value to go to your loved ones, a will is the legal way to make that happen.
List the people, organizations, or charities — known as the beneficiaries — you want to receive your assets when you pass away. The will allows you to specify who gets what and when. It requires the selection of an executor, also known as a personal representative, who will manage your estate after your death and follow the instructions set in the will.
If you have minor children, what will happen to them if both you and your spouse die suddenly or if you are a single parent and you become incapacitated or die? A will allows you to name a guardian to take legal custody of minor children, ensuring they will be cared for.
A trust
This is a great tool to ensure the financial future of your loved ones. Placing a home or money in a trust allows these assets to go directly to the beneficiary you named upon your death. No state probate court. No hassles.
There are two main types of trusts: a revocable trust and an irrevocable trust.
A revocable trust allows you to make changes during your lifetime. So, if grandchildren enter your life, you can add them as beneficiaries. With this trust, you still manage the assets assigned to it and serve as the trustee. You must name a successor trustee who will step in if you become incapacitated or die who will distribute the assets.
With an irrevocable trust, when you place an asset into it, you no longer own it or control it; the trust does. It cannot be revoked or amended once it is created. The trustee you name oversees the trust. This trust can have tax benefits, particularly regarding the estate tax since this type of trust is not subject to estate taxes.
A power of attorney
If you suddenly become ill or are going away on an extended trip and cannot manage your finances, your power of attorney will take care of them. The designated person has the legal authority to act on your behalf to pay bills, manage your business and make legal decisions. You can set limits on the appointee’s powers or grant unlimited authority. A durable power of attorney can serve after you become incapacitated, and this authority stays in effect until it is revoked or you die.
Other estate-planning documents
HEALTH CARE PROXY — In the event you become seriously ill or incapacitated and you cannot make your own medical treatment choices, your health care proxy can. The person you choose has the legal authority to make decisions and carry out your health care wishes.
PET POWER OF ATTORNEY — Let’s not forget about our beloved animal companions! You can appoint someone as a power of attorney to make decisions for your pet. Suppose you go away and leave the pet with a sitter and it gets sick or injured; your pet power of attorney steps in and can act on your behalf. If something happens to you and you cannot care for the animal, the pet power of attorney can make sure your wishes are carried out.
PET TRUST — Set aside money for the care of your pet after your death or if you are unable to care for it while alive. The document lets you dictate who will care for your pet and how it will be cared for. The pet trust springs into action during your lifetime when needed and ensures seamless care for your pet after your death.
Remember that as things change in your life, so must the estate plan documents. Updates may be needed to keep the plan current.
Make sure an estate plan is part of your financial plan. Without estate planning documents in place, your assets are vulnerable and could end up in the wrong hands. Moreover, your choices and wishes may not be honored. This could lead to family strife and unnecessary legal challenges that will cost time and money.
Gentreo has you covered
Gentreo makes creating an online estate plan easy, fast and affordable. Its coaches provide one-on-one guidance through each step of the process, and the company has partnered with licensed estate-planning attorneys in all states to allow state-specific legal advice when creating documents.
Store your estate plan and all important documents in the Gentreo Family Digital Vault. The vault allows you and designated people full access at all hours. MTA members will save 15 percent on the yearly fee. Visit www.gentreo.com/mta for details.
Editor: Carolyn Cassiani
The MTA Advantage is published three times a year as a supplement to MTA Today by MTA Benefits, Inc.
2 Heritage Drive, 8th Floor, Quincy, MA 02171-2119
Tel: 800.336.0990 • Fax: 617.557.6687
Website: mtabenefits.com
No dues dollars are ever used to market MTA Benefits programs.
All program and pricing information was current at the time of publication (October 2022) and is subject to change without notice.
To find out what may have changed, please call MTA Benefits at 800.336.0990.
