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How Writing a Will Is Like Backing Up Your Hard Drive
October 6, 2016
Preparing a will requires that you name individuals who are responsible for settling your estate (executors), taking care of your minor children (guardians) and managing the trusts you establish for the benefit of others (trustees). Having an up-to-date list of your financial assets and liabilities, including digital accounts and passwords, helps smooth the settlement of your estate. (Some people prefer a living trust to direct their estate rather than a will, in order to avoid probate — a legal process that validates the will.)
Other important estate planning documents include a durable power of attorney, durable power of attorney for health care, and a living will.
Durable powers of attorneys (POAs) give another person the authority to manage your financial, personal or health care affairs on your behalf in the event of mental incapacity (brought on by such conditions as dementia or a terminal illness). Health care POAs should also include Health Insurance Portability and Accountability Act (HIPAA) provisions governing an individual’s privacy and access to medical records. A living will gives special consideration to your preference regarding medical treatments that may prolong your life.
Some financial assets and property transfer outside of the will. Financial assets such as life insurance and retirement assets transfer by beneficiary designation. Bank accounts and some investment accounts can transfer by establishing these accounts as a payable on death (POD). How property is titled determines whether the property is considered a probate asset or a non-probate asset. It is important to review these documents regularly to keep up with life changes such as marriage, children, and divorce, and to ensure that assets transfer according to your wishes.