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hi I'm Andy panko owner of tenant
Financial welcome to retirement planning
demystified this video will explain the
basics of what you need to know about
estate planning but before we start
remember this video is only general
explanations in education it's not
specific tax legal or investment advice
before considering acting at anything
you see in this video first consult with
your tax legal or investment advisor
this disclosure is especially important
for this video I'm not an attorney nor
do I try to play one on YouTube
furthermore a lot of the document names
and functions I'm about to describe may
differ state to state this is especially
true if you live in a community property
state so I'm putting in place or
updating your state plan be sure to work
with a duly licensed estate planning
attorney many people think of estate
plan is simply having a will which is a
document that dictates what you want to
happen with your dependents and assets
after you die while having a will is
important it's only one of multiple
pieces of a complete estate plan estate
planning not only addresses what happens
after you die but also addresses many
important matters while you're still
alive for example what happens if you
develop dementia it can no longer make
legal or financial decisions for
yourself or what if you develop a major
medical condition and are literally
unable to communicate your healthcare
wishes to your doctor a proper estate
plan should include at a minimum at
least four documents first is a last
will and testament which is more
commonly known as a will it states your
wishes of what you'd like to happen to
your belongings after you die your will
should contain as much detail as
possible about what assets you have and
to whom you'd like to leave them
furthermore if you have minor children
or other dependents your will should
clearly express who you'd like to be
responsible for them acting as their
guardian or custodian after you pass
because if you don't decide the state
will appoint who they feel would be best
and that person may not be the same
person you would have chosen next is a
power of attorney this details who you
give authority to to make legal or
financial decisions on your behalf if
you're no longer capable of doing so or
otherwise not available to make a
decision when necessary a power of
attorney can be limited to a specific
activity
or can be general to allow for all
necessary decision-making additionally a
power of attorney can be durable so that
it's effective immediately upon
execution or it can be springing so that
it only comes into effect upon the
occurrence of some specified event such
as your mental incapacitation
you should also have an advanced medical
or healthcare directive this is also
sometimes known as a medical power of
eternity or healthcare proxy
whereas a power of attorney document
just mentioned grants decision-making
authority for legal and financial
matters an advanced medical directive
grants decision-making authority
specifically for healthcare matters this
document expresses who you appoint to
make medical decisions on your behalf if
you're no longer able to do so it's
important to note this does not
typically address matters relating to
end-of-life decision making instead that
power is conveyed through the next
document type which is a living will
this continues written instructions to
medical providers regarding what
treatment or support you want or don't
want and end-of-life conditions such as
terminal illness or a permanent
vegetative state as an example a living
will can instruct doctors to not put you
on life support or not resuscitate you
it's important to know that all these
documents can be changed at any time so
don't be concerned about making a
decision or appointing a person who you
may later want to change because the
documents can always be revised with
that in mind it's actually a good idea
to revisit your state documents every
few years people may come and go in your
life so you want to make sure to keep
appointees up to date or your views and
opinions of people who may change over
time so you may want to leave more or
less to certain people and keeping the
state documents current is especially
important when you have minor children
or other dependents who will need legal
supervision after you're gone
raising a child or caring for a
dependent is an incredibly important
responsibility with that in mind you
want to make sure you're still
comfortable with the Guardians who
previously appointed well the documents
I just mentioned are all critically
important they alone don't complete your
estate plan there are certain assets
that pass to your heirs with
going through will for such assets it's
vitally important to properly designate
beneficiaries or structure the ownership
of the asset accordingly the most common
example of these types of assets are
things like life insurance upon your
death your life insurance policy will
pay the benefit amount to whomever you
designate as a policy's beneficiary you
don't have to and typically shouldn't
state the policy's payee in your will
you've beneficiary designation directly
in your policy is a cleanest and most
efficient way to make sure your benefit
ultimately passes to your intended
beneficiary next our retirement accounts
like 401 K is for 3 B's IRAs and pension
plans like life insurance upon your
death these accounts will pass to
whomever you designate as their
beneficiaries again you generally
shouldn't attempt to define retirement
account beneficiaries in your will these
accounts all have their own beneficiary
forms to fill out completely separate
from your will the main difference
between assets like life insurance and
retirement accounts versus other assets
such as houses cars or collectibles is
that life insurance and retirement
accounts pass upon your death by
contract as opposed to by probate by
contract simply means those asset types
have their own beneficiary designation
forms and processes that stay outside of
probate probate is a process by which
the state court system will oversee the
administration of your estate upon your
death in a nutshell when you die your
will will be submitted to the state the
state will then review and hopefully
accept it the state will then govern
over the process of doling out your
assets and establishing guardianship for
your minor children in accordance with
the instructions in your will the
probate process can be long and tedious
and the state doesn't necessarily have
to accept your will and may override
certain of its instructions or terms
this means your wishes may not
ultimately be acted upon
when assets like life insurance or
retirement accounts pass by contract
they completely circumvent the probate
process
this means the assets passed quicker and
with less chance of your wishes getting
challenged after your death in other
word for these assets is non-probate
assets because they stay outside of
probate
also because the probate process goes
through the court system your will and
estate administration process is
ultimately public record that may or may
not be an issue for you but when an
asset passes by contract that all stays
outside of the public eye there's some
other asset types that would still
normally go through probate but you can
help ensure the transfer to certain
people without having to go through your
will you can do this by what's called
account titling which is the name of the
process of designating the ownership
type of certain assets for example if
you're married and owned a house with
your spouse you can own the house under
a form of ownership known as a joint
tenants with rights of survivorship this
means you both equally owned the
property and if one you die the other
automatically assumes ownership of the
whole thing you don't need a will or a
court to decide whether or not your
spouse gets to keep ownership and use of
the property you can also title
ownership that way for non retirement
financial accounts such as checking and
brokerage accounts even if you're not
married you may be able to structure
ownership of certain assets to avoid
probate for example you may be able to
set up a bank or brokerage account as
being payable on death otherwise known
as P OD or transfer on death otherwise
known as Tod as name of these ownership
titling imply the account will pay or
transfer on your death to a designated
beneficiary trusts can also be used as
an estate planning tool to help insure
your assets go where you decide without
the courts getting involved without the
probate process trusts can get
incredibly complex and the intricacies
of trusts are outside the scope of this
video but at a high level a trust is
basically a big bucket it's its own
legal entity that can take ownership of
whatever you put in it and because the
trust is legally distinct from you it
can live on indefinitely when you die
your trust still stays there intact so
one way to efficiently pass your assets
and keep them out of probate is to
create a trust while you're alive and
transfer ownership of certain assets to
the trust that way the trust will
technically own them not you so when you
die they're no longer your assets to
have to pass on the trust will continue
to own them
therefore the trust will stay out of
your way
out of the court system and out of
probate there's a lot more to trust in
this for example you need to set up a
trust agreement that dictates what's
supposed to happen to the assets of the
trust and who's supposed to get those
assets and when and you also have to
point a trustee to oversee the trust and
that person needs to be knowledgeable
trustworthy capable of properly
administering the trust for the
foreseeable future again trusts can get
very technical and very complicated very
quickly for now just know that trust can
be used to help simplify your estate
planning well that's it for estate
planning basics there's a lot more to
estate planning than what was discussed
here as an example this video didn't
touch on any of the strategies for
minimizing taxes through the estate
planning process that will be a whole
video on its own this video is just to
give an introduction to the documents
terms and tools used in estate planning
I hope you enjoyed it if you haven't
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see you soon
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