An estate plan is an arrangement of your financial affairs designed to accomplish several essential financial objectives, both during your lifetime and upon your death. The plan should accomplish the following goals:
- Provide tax-efficient income during your lifetime, before and after retirement
- Provide tax-efficient dependant support after your death
- Provide tax-efficient transfer of your wealth
- Protect your assets
Summary and Takeaways
Effectively communicating your estate plans to those who need to know them is vital. Otherwise, those wishes may remain unclear or completely unknown. Setting up a reliable communication plan is therefore a very important part of overall estate planning. That includes communicating proactively with the executor of your estate, your healthcare Power of Attorney, and those you select to oversee the disbursement of your wealth and other assets.
Key Takeaways
- Wills and Powers of Attorney are the most common documents used to outline and convey your estate plan.
- They should be drafted in your jurisdiction of legal residence and reviewed at least every five years − or whenever a major material change in your life occurs.
- Notify those you appoint to perform important functions – such as the executor of your estate. Ensure that they fully understand their responsibilities and agree to do what is asked of them.
- Keep in mind that even your spouse may not have the legal authority to take charge of such responsibilities, unless you specifically authorize them to do so
- That’s another reason why involving your attorneys, financial advisors, and tax planners in these matter is so crucial and helpful.
Wills and Powers of Attorney are the most common documents used to outline your estate plan. Wills and Powers of Attorney should always be drafted in your jurisdiction of residence, and should be reviewed by your financial advisor, accountant, and estate attorney at least once every 5 years, or when a material change in your life occurs.
A Will outlines your wishes for your assets after you are deceased – e.g., how, when, and to whom your assets will be conveyed upon your death. You designate an Executor(s) within your Will to carry out your wishes as described in your Will upon your death. It is important to notify your Executor(s) of their role, and what it entails. To help you do this, we have drafted a sample, customizable message below that you can send to your designated Executor(s).
A Power of Attorney for Property allows a third party whom you designate to handle your personal financial affairs (e.g., paying bills, managing investments, etc.) should you become incapacitated and are no longer able to do so yourself. Unfortunately, a spouse has no automatic legal authority to undertake these actions on behalf of an incapacitated spouse (even though many times they do). It is important to notify anyone you designate with Power of Attorney of their role, and what it entails. To help you do that, we have drafted a sample, customizable message below that you can send to those you designate with Power of Attorney.
A Power of Attorney for Personal Care allows a third party that you designate to make medical decisions on your behalf, should you become incapacitated and are no longer able to do so yourself. Unfortunately, a spouse has no automatic legal authority to undertake these actions on behalf of an incapacitated spouse (even though many times they do). It is important to notify those you designate with Power of Attorney of their role, and what it entails. To complete this, we have drafted a sample, customizable message below that you can send to your Attorney(s) during your lifetime.
If you have any questions about your estate plan, or would like a review of your current estate, please reach out to your Cardinal Point advisor.
SAMPLE MESSAGE TO EXECUTOR OF WILL:
Dear [Executor’s name],
I am writing to provide you with some instructions regarding your role as the Executor of my Will.
As the Executor, it is your responsibility to ensure that the terms of my Will are carried out in accordance with my wishes. This will involve several tasks, including:
- Obtaining a copy of the Will and providing it to the appropriate parties, such as the probate court and any beneficiaries named in the Will.
- Identifying and inventorying my assets, including any real estate, personal property, financial accounts, and other valuables.
- Paying off from my estate any outstanding debts or liabilities that I may have at the time of my passing.
- Distributing my assets to the beneficiaries named in the Will according to my wishes.
- Filing any necessary tax returns and paying from my estate any taxes that may be due.
It is important that you follow the instructions outlined in my Will as closely as possible, and that at all times you act in the best interests of the beneficiaries. If you have any questions or concerns about your role as the Executor, please do not hesitate to contact me or my attorney for guidance.
For reference, below is the contact information for the professional advisors with whom I work:
- Estate attorney:
- Accountant:
- Financial advisor:
Sincerely,
[Your name]
SAMPLE MESSAGE TO REPRESENTATIVE FOR POWER OF ATTORNEY:
Dear [Representative’s name],
I am writing to provide you with some instructions regarding your role as the attorney-in-fact (representative) under my Power of Attorney.
As my representative, it is your responsibility to act on my behalf and make decisions for me in the event that I become incapacitated or otherwise unable to make decisions for myself. This may include making financial decisions, managing my property, or making medical decisions on my behalf.
It is important that you follow my wishes and act in my best interests at all times. To help you understand my wishes, I have provided you with a list of my values and priorities, as well as any specific instructions that I have included.
In carrying out your duties as my representative, you should also be mindful of any legal or ethical obligations that you may have. If you have any questions or concerns about your role, please do not hesitate to contact me or my attorney for guidance.
For reference, below is the contact information for the professional advisors with whom I work:
- Estate attorney =
- Accountant =
- Financial advisor =
Thank you for agreeing to serve as my representative. I have complete trust in your ability to carry out your duties in a responsible and competent manner.
Sincerely,
[Your name]
Disclaimer: The above draft messages do not constitute legal advice. We encourage you to customize your messages to your Executor(s) and those you designate as representatives with Power of Attorney.