Most people I meet are not rich.  Instead, they are normal, hard-working people who have spent a lifetime working to pay off a house, build up some savings, and take care of their family along the way.  Some people have been able to save a little more than others along the way, while some have not been able to save much at all, but they got their house paid off, so that is a big win!  I hope to pay my house off some day, too, but for right now, I pay my mortgage monthly, just like most people I know.

For people who are in the normal category, like most people I meet, planning for huge dollar amounts to be passed on when someone dies is not a big concern.  Instead, people are concerned about how they can pass along what they have worked so hard to accumulate.

Nobody wants their hard earned money and property to be wasted.  The average person just wants to know where their stuff will go, and how that will all work.  The answer is that you want to write it down in an official will.  A will is the foundational document to say how you want to distribute your assets when you die, and it is essential that you have a good will.  A will is not the only necessary document in an estate plan, as there are four basic documents – a will, a financial power of attorney, a medical power of attorney, and a living will – but starting with a will is a great idea.  You want to clearly describe who gets the assets, and you need to pick who will be in charge of distributing those assets.  Who you pick to carry out your plan is often as important as laying out the plan itself.  Your plan should include how to distribute assets when you die, and also how to handle things if you are not yet dead, but you are unable to handle your own affairs.  You want to make sure you don’t leave things to chance!

 

You Want to Create a Will to Say Where Your Assets Will Go

The most important document to have as part of your estate plan is a will.  The will dictates where your assets will go after you die.  You can give them to your kids, or to someone else, but you want to write down where you want the assets to go.  The will is the document that tells your survivors where to send your assets, and tells the courts what you want to do with the assets, so that the court can enforce your wishes.  Mostly, what you want to do in a will comes down to the old saying that “if you don’t write it down, it never happened.”

If you don’t write down what you want to have happen, and you assume your relatives know what to do with your assets, that is setting things up for failure.  I have seen families who thought that they knew exactly what a deceased family member wanted to have happen once the person died, but one family member had been told something different, or thought they were supposed to get something different.  This caused the family to fight over what the deceased person wanted, and caused some very hard feelings among the family members.  In addition, if you don’t write a will, you are subject to the rules the State of Colorado has laid out to distribute your assets, which may not be the way you want assets distributed.  It is far better to simply write down what you want to have happen in a will, so that what you want will be carried out after you are gone.

 

Who You Pick to Carry Out Your Directions is Vital

As part of your will, you will pick someone to carry out your directions.  Most of the time, the courts will not carry out the directions you provide in the will, but you pick someone to be the “personal representative” of your will.  The personal representative is called an “executor” or “executrix” in other states, but this is just different terminology.  The personal representative is the person who gets legal authority from the probate court to transfer assets out of your name and get them to the people you named in your will to receive the assets.  The personal representative needs proper authority from the courts to act on your behalf, otherwise the personal representative will not be able to access your assets.

For example, the personal representative needs to be able to go to the bank and get the money from your account to be able to pay the money over to the named beneficiaries, or heirs, in the will.  A bank will not give money from your account to someone who is not authorized to get the money – and that is exactly what we want!  We don’t want banks giving our money to someone who shouldn’t be able to get it.

Your personal representative also needs to be the type of person who will not hold onto the money for themselves, but will get the money to whom it belongs – the named beneficiaries, or heirs, in the will.  While it is true that the personal representative can be paid for their work, unless a personal representative is also a beneficiary, the personal representative doesn’t just get to hold onto the assets of the deceased person for their own use.  Instead, they need to gather assets and pay the assets on to the named beneficiaries of the will.  This means you really want to pick someone with good integrity and ability to carry out your instructions without trying to benefit themselves in the process.  Your choice of who is in charge of your will is vital to the success of getting your wishes carried out properly.

 

Your Estate Plan Isn’t Just for When You Are Dead

Who you choose to distribute assets after you are dead is important, but just as important is who can take care of you and your assets while you are still alive.  Your estate plan isn’t just about what happens to your stuff when you die, but also about how you get from here to there.  A good estate plan includes a will to say where your stuff goes when you die, but also includes a financial power of attorney and a medical power of attorney.  These documents allow you to choose someone to make decisions on your behalf if you are alive, but unable to handle your own decisions.  If you can’t make your own decisions, you want to pick who can act on your behalf very carefully, as carefully as you picked your personal representative, or maybe even more carefully.  The person you pick will be able to make medical decisions for you when you cannot, or will be able to use your assets to take care of you when you cannot take care of yourself.  You don’t want to leave that up to chance!

Instead, you want to prepare documents that give someone power to act on your behalf long before a problem arises, or a crisis hits.  You want your estate plan to not only include a will, but also a financial power of attorney and a medical power of attorney.  It should also include a living will, which says how long to keep you on life support if you will not recover, but that is a topic for another blog post.  Essentially, you want your estate plan to cover what will happen to your stuff when you die, and also cover how you get from here to there.

 

As an Average Joe, You Want to Have A Complete Estate Plan

I think of the four basic estate planning documents as a little like building a house.  You want to have all four walls set up, so you want to have all four documents set up – a will, a financial power of attorney, a medical power of attorney, and a living will.  If you don’t have one of these documents, it is a little bit like having a house with a missing wall.  The missing wall is not a problem, until it rains, or snows, or gets windy, or is hot, or cold, and then it becomes a problem.  If you don’t have a complete estate plan, it can become a problem when you need help, or you die.  Having a will to say what happens to your assets when you die, picking a good person to carry out your wishes, and having an estate plan that covers how you get from here to there gives you the protection you need for your own, average Joe life.  Your estate plan doesn’t need to be fancy or complex, it just needs to be there…and be right!