Are You Putting Off Estate Planning?

Carrie Schwab Pomerantz
Posted: Feb 07, 2013 12:01 AM

Dear Carrie, My husband and I are in our early 40s with two young kids. We know we should have some sort of estate plan, but it seems like such a chore. Any way to keep it simple? --A Reader 

Dear Reader, You're certainly not alone in putting off estate planning. On top of our understandable aversion to facing our own mortality, estate planning conjures up images of mind-boggling detail, long hours with an attorney and high cost. But for most people, creating a basic estate plan can be pretty simple in terms of paperwork. The hard part comes in forcing ourselves to do the upfront thinking and get organized.

On the bright side, this thinking and organization is something we all should do periodically anyway. Plus, an estate plan isn't only about money; it's about protecting your kids and each other. So it really is worth the time and a bit of effort

Start with your financial situation

Many people think an estate plan is only for the wealthy. But just because you're not worth millions doesn't mean you shouldn't protect what you have. Now is a good time for you and your husband to take financial inventory. Add up what you own, such as a home, business, bank accounts, investment and retirement accounts and life insurance.

Now subtract what you owe to get an idea of your net worth. You might be surprised at the value of what you have -- and therefore motivated to make sure it passes properly to your heirs. Even if it's simply to each other and your kids, why not make it easier on yourselves and your children if the unexpected occurs?

Agree on the personal decisions 

How you distribute your assets is only one part of estate planning. Equally, if not more important, is designating a guardian for your children. If you don't, the state will. You also should think about your preferences for health care if you become incapacitated, and appoint someone to communicate your wishes. Plus, you'll need someone to make financial decisions.

It's a good idea to contact the people you have in mind. All of these positions involve a lot of responsibility. Make sure the people you choose are willing and able to handle it.

Prepare three basic documents 

Once you know what you want to do, the paperwork can be fairly easy. I always advise consulting with an estate-planning attorney, but if your finances are straightforward, your estate plan will likely be as well. You'll need:

--A will -- This states how your assets should be distributed when you die. It's also the place to designate the guardian for your children. You should name an executor who will be responsible for settling your estate. This can be a family member, friend or attorney. Whoever you choose should be someone you trust to be fair and responsible in carrying out the duties.

--A durable power of attorney for finances -- Also known as a financial power of attorney, this gives someone the authority to make financial decisions on your behalf should you become incapacitated.

--An advance health care directive with medical power of attorney --This designates an individual to make medical decisions for you in the event that you're unable to do so. It also spells out the type of care or life-sustaining measures you want -- or don't want.

To be valid, you must sign your will and also have it witnessed and signed by two other people. The powers of attorney must be notarized.

Update beneficiaries

If you have IRAs, 401(k)s and life insurance, check that you've designated your beneficiaries properly. These assets pass directly to your heirs without going through probate. It's common to name your spouse as primary beneficiary and your children as secondary beneficiaries.

Consider a trust

A revocable living trust is another option. Its main value is to avoid probate, which can be a long, costly -- and public -- process. While a living trust takes a bit more time and costs more to establish, it keeps your estate private and makes it easier to settle. It can also reduce taxes for wealthy individuals. Depending on your circumstances, you might want to talk to an estate-planning attorney about what it takes to set up a trust.

Keep documents accessible

Consider keeping your documents in a safe place in your home, along with property deeds, insurance policies, a list of your accounts, and contact information for your attorney or advisors. A safe deposit box isn't the best place because it could take a court order for someone to access it if it's in your name only. You can also have your attorney keep copies.

Creating a basic estate plan may help you focus on the rest of your finances and become more organized. So think of it less as a chore and more as an opportunity to put your financial house in order. And, please, do it now-for yourselves and for your children.

The information herein is not intended as Legal advice. Where such advice is necessary and appropriate, please consult a qualified attorney.

Carrie Schwab-Pomerantz, CERTIFIED FINANCIAL PLANNER(tm), is president of Charles Schwab Foundation and author of "It Pays to Talk." You can e-mail Carrie at This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at