According to a Caring.com study, more than 60% of Americans do not have a will. No one likes to plan for a future without them in it, but creating a formal estate plan means your loved ones are protected for life, and your wishes are known for your estate. Preparing for your passing is one of the greatest acts of love you can do to help your friends and family during a difficult and stressful time. sEstate planning can feel a bit daunting, because it is a legally binding document, and historically, one you have to go to an attorney to create. That's why MyAdvocate was created. Whether you're unsure what estate planning is or don't know where to start, MyAdvocate is a step-by-step estate planning tool created to help Americans protect themselves, their loved ones, and their legacy. Below we've outlined some of the most common questions we see and our answers.
What is an estate plan, and why do I need one?
An estate plan is a set of legal documents that protect you, your loved ones, and your belongings in the event of incapacitation or death. Unfortunately, the government has a rigid set of rules that apply when you neglect to create an estate plan, leaving you without a voice, and your family on the hook for costly probate fees. That's why we believe all Americans should have an estate plan.
While estate planning is not just for the wealthy, most people, and their loved ones, can benefit from putting legal affairs in order. For example, without an estate plan, your state legislature decides who gets your assets and, if you have minor children, who will care for them. Typically, without estate planning, the state courts will pass on any assets you own at your death to your closest relatives, even if that would not have been your choice.
Estate planning gives your family a roadmap to follow when you pass away or become incapacitated, making sure your belongings are passed on to those you select and designating who will have the authority to oversee that your wishes are honored. Failing to address your estate may result in wishes not being followed along with those closest to you having to deal with an administrative mess.
What are the most common legal documents that people customize to protect themselves and their families?
Last Will and Testament: Also referred to as your Will, is a legal document that describes how your assets are distributed, who will manage the settlement of your estate, and who will be the guardian for minor children. The following is required to make your Will legally valid.
- It must be in writing. Although you can compose your Will online, you must still follow your state's signing and validity requirements to make it legally valid.
- It must include witnesses. Your state has rules regarding any notary and witness requirements. You must follow these rules to the letter. (MyAdvocate has a process to help you, here.)
General Durable Power of Attorney (also known as Financial Power of Attorney): Enables someone to act on your behalf if, during your lifetime, you are in a condition where you are unable to sign or transact for yourself. In many cases, this person's power to act for you is triggered by a physician documenting that you are in a state of incapacity.
Guardianship Designation: The person who will have the powers and responsibilities to care for a minor child's needs. In most states, children require a guardian until the age of 18 years old.
Living Trust (also known as Revocable Trust): Similar to the Last Will and Testament, however, a more private and powerful approach to administering your estate and distributing your assets. They are generally known for avoiding the probate process.
Health Care Power of Attorney or Advance Health Care Directive: This document lets you give someone you trust the legal authority to make important decisions about your medical care when you are unable to.
Living Will: Includes your instructions regarding life support machines and takes effect when you have a terminal and irreversible condition. It may also include your decisions around organ donation and pain management.
HIPAA Authorization: This document must be signed to authorize someone to discuss your health care, health insurance, treatments, etc., with a health care provider or insurer. If you do not sign a HIPAA authorization, privacy regulations prohibit your health care providers from sharing information regarding your Protected Health Information (PHI) with others.
How often should I review my estate plan?
It is recommended to review your estate plan at least annually and update it as your life circumstances change, such as getting married, having a baby, going into major surgery, getting divorced, or any other major life event.
Considerations for cryptocurrency and your estate plan
Distributing titled assets is straightforward and has transparent processes for moving ownership to your desired beneficiaries when an estate plan is executed. Crypto assets can be more complex since they can be either held in an online wallet or offline. By design, Crypto is designed to give increased privacy features that make detecting and transferring more difficult. We've outlined some things to consider below:
Ownership: Are the assets held in an online wallet account where the account ownership can be transferred to another owner with proof of Estate transfer? Offline wallets are protected by both possession and a password, making the transfer more complicated or risky unless clearly documented and instructions are provided to your executor.
Location of assets: Make sure your heirs or executor knows where all the assets are located and where the passwords are. Consider including clear instructions as these types of assets can easily go missing or never be found.
Privacy: Your will becomes public record upon your passing. A trust is not public record, so detailing crypto information such as location, type, and how to access your Crypto is not revealed to the public.
Financial Impacts: Some jurisdictions require clear cost basis proof to enable proper gains calculations.
Understanding: A majority of the public does not know what Crypto is and how to manage it. Consider including clear instructions with the assets or are given to your executor to ensure a simple and effective distribution of the asset.
Is online estate planning right for me?
Yes, online estate plans are a fast and easy way to protect your family for anyone. A step-by-step guide ensures you can complete the process that reflects your wishes and is entirely legal in all 50 states.