Estate Planning Strategies
It’s Time to Create, or Update, Estate Plan
By Saghir A. Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
If you, your adult children, or other family members haven’t created an estate plan or have one but the documents may be outdated, today is a reminder of how vital having an up-to-date plan can be, particularly a health care directive that you may need if you’re temporarily incapacitated. Here are the five most important documents for many estate plans.
A will provides instructions of when you die. You appoint a personal representative (or “executor”) to pay final expenses and taxes and distribute your assets. Remember that beneficiary designations on 401(K) plans, IRA’s, insurance policies, etc., supersede what you have in your will. If you have minor children, a will is the only way to designate a guardian for them.
- Durable power of attorney:
A power of attorney lets you name an agent, or attorney, to act on your behalf. You can give this individual broad and limited management powers. Choose them carefully because they will generally be able to sell, invest and spend your assets. A traditional power of attorney will continue during incapacity to provide a financial management safety net. A durable power of attorney terminates on your death.
- Health care power of attorney:
A durable power of attorney for health care, also called a health care proxy, authorizes someone to make medical decisions for you in the event you are unable to do yourself. The documents and a living will can be invaluable for avoiding family conflicts and possible court intervention if you’re unable to make your own health care decisions. Remember to review this document regularly to ensure the right person is designated to make any necessary medical decisions. If you are a parent, be aware that once a child turns 18, you need health care power of attorney for them so you can engage with their medical professionals.
A living will expresses your intensions regarding the use of life-sustaining measures in the event of a terminal illness. It expresses what you want but does not get anyone the authority to speak for you.
By transferring assets into a revocable trust, you can provide for their continued management during your lifetime (when you’re incapacitated, for example) at your death, and even for generations to come. Your revocable living trust assets avoid probate and reduce the chance that personal information will become part of public records. Along with working with an attorney to create or update these, and possibly other estate planning documents, remember to:
- Make sure your loved one are able to access your documents or know whom to contact (such as your attorney) when they need them.
- Go over account titling, power of attorney, and successor trustee provisions to be certain the right individuals have access to funds.
- Determine you should have information on electronic passwords and online banking access so they can access information, update automatic payments, etc.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
