Pros and Cons: Payable on Death (POD) Accounts

Pros and Cons: Payable on Death (POD) Accounts – SmartAsset

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Payable on death accounts can help streamline the process of transferring certain assets to loved ones after you pass away. Also referred to as a POD account or Totten trust, a payable on death account can be established at a bank or credit union and is transferrable to the beneficiary of your choosing. There are different reasons for including a payable on death account in your estate plan and it’s helpful to understand how they work when deciding whether to create one. Estate planning is best done with the counsel of a financial advisor, who can help you coordinate your investment goals with your end-of-life wishes.

Payable on Death Account, Explained

A payable on death account is a type of bank account that can be used for estate planning purposes. You can create this type of account at a bank or credit union and your bank may also let you convert any existing accounts you have to a POD account.

The difference between a traditional bank account and a POD account is that the latter has a named beneficiary. This is someone you choose to receive any assets held in the account when you pass away. Depending on your bank, you may be able to name multiple beneficiaries for the same account or choose a primary beneficiary, along with one or more successor or contingent beneficiaries.

How a Payable on Death Account Works

A payable on death account is simply any bank account that has a named beneficiary. For instance, a POD account can be a:

What makes a bank account a payable on death account is having a named beneficiary. It’s up to you to decide who to name. If you’re married, your spouse might be a logical choice. But if you’re unmarried, divorced, widowed or separated you might choose an adult child, sibling or another relative instead.

During your lifetime, you have control over the assets held in a POD account. So if you name a beneficiary for your checking account, for instance, you’d still be able to spend money in the account as you normally would.

Once you pass away, the assets held in a payable on death account would be transferred to the beneficiary. Typically, they’d need to show proof of identification and a copy of the death certificate before the transfer can be completed. State laws vary, so it’s important to understand how the process works when choosing a beneficiary.

Pros of Payable on Death Accounts

There are several benefits associated with using POD accounts to transfer assets. First, assets that are passed to someone else through a POD account are not subject to probate. The probate process, which is a legal process in which your assets are inventoried, debts are paid and remaining assets distributed to your heirs, can be time-consuming and costly. Setting up a payable on death account allows the beneficiary you name for that account to sidestep it for any assets held in that account.

That’s an advantage if you want to ensure that your beneficiary is able to access cash quickly after you pass away. Even if you have a will and a life insurance policy in place, those don’t necessarily guarantee a quick payout to handle things like burial or funeral expenses or any outstanding debts that need to be paid. A POD account could make it easier for your loved ones to get the funds they need right away to pay for those and other expenses.

It’s important to keep in mind that beneficiaries can’t access any of the money in a POD account while you’re alive. On one hand, that could be seen as a pro since you don’t have to worry about them spending down the assets without your knowledge. But it also has the potential to be a con in certain situations.

Cons of Payable on Death Accounts

As mentioned, beneficiaries of a POD account can’t tap the money while the primary account owner is still living. That could be problematic if you become incapacitated and your loved ones need money to help pay for medical care. In that instance, having assets in a trust or a jointly owned bank account could be to your advantage.

Another con is that you can’t change the beneficiary of a POD account once you name someone. So if they pass away before you do and there are no other beneficiaries named to follow after them, the account would be subject to the normal probate process.

Payable on Death Account vs. Trust

You may be wondering whether payable on death accounts are better than trusts for estate planning. Trusts allow you to transfer assets to the control of a trustee on behalf of one more beneficiaries. You can act as a trustee or have someone else fulfill that role during your lifetime and after you pass away.

Technically, POD accounts are a type of trust. Again, banks may reference them as Totten trusts, informal trusts or tentative trusts. The difference is that they’re easier and less expensive to set up than a traditional living trust. And of course, they only focus on assets held in a bank account.

Setting up a payable on death account could make sense if you want to make sure your beneficiaries have a source of ready cash when you pass away. But you may still need a living trust if you have other assets you want to transfer, such as real estate, vehicles, investments or business assets.

How to Set Up a Totten Trust or POD Account

If you’re interested in creating a payable on death account, the first step is contacting your bank. They can tell you whether it’s possible to add a beneficiary designation to any existing accounts you have or whether you’d need to create a new account. From there, you’d need to decide who you want to add as a beneficiary. Remember that once you make a beneficiary designation it cannot be changed. So you need to be reasonably sure that the person you choose will outlive you and manage any assets they receive responsibly.

Next, you’d want to let the person you’re naming as beneficiary know that you’re creating a POD account. This way, they can familiarize themselves with what they’ll need to do to claim any assets in the account once the time comes.

Finally, compare the terms of the POD account with the terms specified for those assets in your will. In most cases, a payable on death account can override a will so reviewing your wishes can help avoid any potential conflicts among your heirs after you pass away.

The Bottom Line

Whether you call it a payable on death account or a Totten trust, this type of account can serve a useful purpose when creating an estate plan. If you’re not sure whether you need a POD account, your financial advisor may be able to shed some light on when it makes sense.

Tips for Estate Planning

  • Consider talking to a financial advisor about the best ways to pass on bank accounts, investment accounts and other assets. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool makes it easy to connect with professional advisors in your local area. If you’re ready, get started now.
  • Until you know what you’ll have to retire on no estate plan can be complete. A free, easy-to-use retirement calculator can give you a quick and accurate idea of whether you have reached your financial goals.
  • A transfer on death account automatically transfers its assets to a named beneficiary when the holder dies  For example, if you have a savings account with $100,000 in it and name your son as its beneficiary, that account would transfer to him upon your death.

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Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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Qualified Domestic Trust (QDOT): Marital Deduction

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Trusts can be a useful tool for estate planning if you’d like to preserve assets for loved ones while minimizing estate taxes. A qualified domestic trust (QDOT) is a specific type of trust that can offer tax benefits for married couples. With a QDOT, a surviving spouse can qualify for the marital deduction on estate taxes for assets included in the trust. This type of arrangement can be particularly helpful when a surviving spouse is not a U.S. citizen. Here’s more on how these trusts work, the benefits and limitations of having one and how to establish a QDOT as part of your estate plan. Estate planning is always done best in consultation with a financial advisor.

Qualified Domestic Trust (QDOT), Explained

A trust is a legal arrangement in which you transfer assets to the control of a trustee. This can be yourself or someone else you name and it’s the trustee’s duty to manage assets in the trust on behalf of the trust’s beneficiaries.

A QDOT is a specific type of trust arrangement that’s designed to benefit married couples, specifically when one spouse is not a U.S. citizen. This type of trust extends the marital tax deduction to non-citizen spouses, who would otherwise not be eligible to claim the deduction on estate taxes.

If you’re married to someone who is not a U.S. citizen, then setting up this type of trust could make sense if you’d like to minimize any tax burden your spouse may assume if you pass away first. A QDOT can essentially create a tax shelter for non-citizen spouses as part of an estate plan.

How a QDOT Works

To understand how a QDOT can benefit a non-citizen spouse, it’s helpful to understand the marital deduction and how that applies to estate taxes. Ordinarily, the Internal Revenue Code allows surviving spouses to claim a 100% marital deduction for estate taxes that may be due on assets they inherit when their spouse passes away. This is a significant tax break, as it enables surviving spouses to assume control of marital assets without getting hit with a sizable tax bill.

When a married couple consists of one spouse who’s a U.S. citizen and one who is not, the marital deduction does not apply. That means a surviving spouse could face substantial estate taxes on any assets they assume control of after their spouse passes away. Creating a QDOT and transferring assets to it with the non-citizen spouse named as beneficiary solves this problem.

Assets held in the trust would go to the surviving non-citizen spouse, allowing them the benefit of using those assets as well as any income they generate. They would pay no estate tax on assets in the trust. The surviving spouse could then pass those assets on to their children or another named beneficiary when they pass away. If applicable, the estate tax would be due on those assets at that time.

Benefits of a QDOT

The main advantage of including a QDOT in your estate plan is to extend tax benefits to your spouse if they’re not a U.S. citizen and don’t plan to apply for citizenship. A surviving spouse would be able to enjoy the marital tax deduction on estate taxes. They’d also be able to receive income distributions from the trust. Those would be subject to income tax but not estate tax. If you have a sizable estate then setting up a QDOT could be worth it to ensure that you’re passing on as much of your wealth as possible to your spouse.

While setting up this type of trust is generally more complicated and expensive than setting up a basic living trust, it may be an easier way to afford tax protections to a non-citizen spouse versus having them pursue citizenship.

Limitations of a QDOT

While there are some advantages to QDOT, there are some potential downsides to keep in mind.

First, it’s important to note that the IRS is specific about how these types of trusts are set up. The trustee must be a U.S. citizen and depending on the amount of assets that are held in the trust, a secondary trustee may be necessary. This trustee must be a U.S. bank.

Once the spouse who created the trust passes away, their executor must make a QDOT election when filing a federal estate tax return. This is necessary to qualify for the marital deduction. The IRS specifies that the estate tax return with the QDOT election must be filed no later than nine months after the individual who created the trust passes away.

Estate tax may be due if a surviving spouse receives principal from the trust, rather than income. There are, however, some exceptions to this rule. For instance, if a surviving spouse is experiencing financial hardship and has no other assets to tap into it may be possible to receive principal from the trust without being required to pay estate tax.

Perhaps most importantly, spouses should be aware that a QDOT only extends to assets held in the trust. If you have other assets you wish to pass on to a surviving spouse who’s not a U.S. citizen, those wouldn’t be eligible for the marital deduction protection offered by a QDOT if they’re not included in the trust.

How to Set Up a QDOT

Setting up a QDOT starts with determining whether it’s something you can benefit from having in the first place. If you’re married to someone who is not a U.S. citizen, then it may be worth meeting with your financial advisor to discuss the pros and cons of including a QDOT in your estate plan. Your advisor can help to assess any potential estate tax consequences associated with passing on wealth to a non-citizen spouse.

If you’ve determined that a QDOT is something you need, the next step is finding an experienced estate planning attorney who can help with setting one up. Creating a QDOT  means understanding which IRS rules apply and that’s something an estate planning attorney or a tax professional can help with.

The Bottom Line

A QDOT could be useful to have if you’re married and you want to minimize tax impacts associated with leaving assets to a non-citizen spouse. The biggest considerations to keep in mind are what assets you’ll transfer to the trust and how those will be managed on behalf of your spouse once you pass away. Again, getting help from a tax professional, estate planning attorney and your financial advisor can make creating this type of trust as smooth a process as possible.

Tips for Estate Planning

  • Consider talking to a financial advisor about the tax implications of passing on assets to a non-citizen spouse and whether it makes sense to have a QDOT. If you don’t have a financial advisor yet, finding one doesn’t have to be difficult. SmartAsset’s financial advisor matching tool makes it easy to connect in just minutes with professional advisors in your local area.  If you’re ready then get started now.
  • Wondering if you have enough to retire? Our free, easy-to-use retirement calculator can give you a good estimate of your annual, post-tax income upon retirement.

Photo credit: ©iStock.com/Robin Skjoldborg, ©iStock.com/courtneyk, ©iStock.com/monkeybusinessimages

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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How Does an Estate Tax Marital Deduction Work?

How Does an Estate Tax Marital Deduction Work? – SmartAsset

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Estate planning as an individual is complicated enough, but planning for it in a marriage can create greater difficulties. Working as a unified partnership for your joint estate’s future means that you both will have priorities you want to bring into the plan. Some concerns you both might have include costly estate taxes and providing for the other after one passes. If so, the estate tax marital deduction might be worth investigating. Here is some basic information you’ll need before considering whether the marital deduction could fit into your estate plan.

Consider working with a financial advisor who can guide you in creating an estate plan that meets the needs of both you and your spouse.

What Is the Estate Tax Marital Deduction?

The estate tax marital deduction, otherwise called the unlimited marital deduction or more simply the marital deduction, is a valuable estate planning device for certain married couples. It allows one marriage partner to transfer an unlimited amount of assets to his or her spouse without incurring a tax. The marital deduction is determinable from the overall gross estate. The total value of the assets passed on to the spouse is subtracted from that amount, giving us the marital deduction. This inter-spousal transfer can occur during the couple’s lifetime or after one spouse’s death, according to a will.

The marital deduction applies to both estate and gift taxes as well. You can find the provision under Section 2056 of the Internal Revenue Code as the marital deduction rule.

Who Qualifies for the Estate Tax Marital Deduction?

The marital deduction applies regardless of how the property or assets are passed on to the other spouse. This can include beneficiary designation, intestacy or any other method. However, there are other requirements that determine if the marital deduction applies.

Foremost is that the involved individuals are married. After that, you need a surviving spouse. Said spouse must inherit the property. This property must come from the decedent’s, or transferor’s, gross estate, and it has to be transferred directly. It cannot be a terminable interest.

An example of a terminable interest would be if the transferor left the assets to his or her surviving spouse but with a lifetime limit. That would turn the property into a life estate, which the beneficiary cannot leave to anyone after their own passing. However, an exception to the outright transfer is qualified terminable interest property (QTIP). A QTIP is an irrevocable trust that allows the grantor to provide for the spouse but still ensure that the assets pass on to certain beneficiaries following the surviving spouse’s death.

Keep in mind: spouses who aren’t U.S. citizens don’t qualify for the marital deduction. You can obtain a qualified domestic trust (QDOT) instead, which applies the marital deduction to assets placed in the trust. A non-citizen spouse can then access this.

How Does the Estate Tax Marital Deduction Work?

We’ve established that a marital deduction applies to assets subtracted from the transferor’s gross estate. The surviving spouse then inherits this property without paying an estate tax on it. The deduction also applies if the decedent gifts the property. The gift can be given outright, like the transfer, or placed into a trust. If it’s put into a trust, the surviving spouse must have access to income throughout their life and have power of appointment over the assets. A QTIP would allow you to navigate around the latter.

It’s essential to know that the marital deduction only defers the estate and gift taxes. So, while you do not have to pay them after the first spouse’s death or transfer, the taxes will apply when the surviving spouse passes. The tax burden depends on the estate’s size at the time of this death.

Estate Tax Marital Deduction: Key Considerations 

While the marital deduction might work perfectly for certain estates, it may need support to be the right choice for yours. Or, the marital deduction might not work for you at all. Regardless of whether you need to bolster your choice or find other ways to minimize your estate plan’s costs, you should take advantage of other exemption and deduction options.

As of 2021, estates that exceed $11.7 million for individuals and $23.4 million for married couples are subject to estate tax. So, if your estate does not surpass that threshold, you will not face a federal estate tax when your spouse passes. However, if you intend to use the marital deduction, your partner’s lifetime exemption is lost. That is because it cannot be transferred to the surviving spouse. This can create a problem for larger estates since the surviving spouse only has her or his own exemption value to protect the combined assets.

So, if the lifetime exemption isn’t helpful, you can pursue the credit shelter of an A/B Trust. The credit shelter can eliminate the lifetime estate tax exemption concern, since the total amount of assets left to the surviving spouse under the marital deduction will decrease. It’s best to speak to a financial professional before you pursue trusts in your estate plan, though.

While trusts can allow for flexibility, you may still be concerned about the beneficiary status. If you want to ensure your children or other individuals are the eventual beneficiaries of your estate, you can opt for a QTIP, as discussed earlier.

The Takeaway

The estate tax marital deduction is a useful device for many married couples. However, if it’s not the right fit or used incorrectly, it can end up costing the estate more in the long run. If you and your partner are considering a marital deduction, it’s best that you speak with an estate attorney beforehand. They can break down the process and help you both decide if it’s the right choice for you. Most of all, they can guide you to an estate plan that protects you both and your assets, regardless of what the future may bring.

Estate Planning Tips

  • Consider working with a financial advisor to make sure you are handling your investments and assets are getting the least confiscatory tax treatment. Finding a financial advisor doesn’t have to be hard. SmartAsset’s matching tool can connect you with several in your area within minutes. If you’re ready, get started now.
  • Estate planning comes with a maze of challenges. Unfortunately, getting lost or making a mistake is often costly. If you want to avoid that, check out our guide to the five estate planning mistakes you can’t afford to make.
  • While the trusts mentioned here might not work for you, others could be a perfect fit. If you’re interested, read our report on how other trusts function.
  • Income in America is taxed by the federal government, most state governments and many local governments. The federal income tax system is progressive, so the rate of taxation increases as income increases. A federal income tax calculator can give you a quick read on what you owe Uncle Sam.

Photo credit: ©iStock.com/FG Trade, ©iStock.com/FG Trade, ©iStock.com/JohnnyGreig

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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TotalLegal Review: Pros & Cons

TotalLegal Review: Pros & Cons – SmartAsset

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TotalLegal is a company that offers consumers the opportunity to create quality legal documents for a variety of needs. With regards to estate planning, the website allows users to create a last will and testament, power of attorney, living will and medical power of attorney. It also offers a full plan subscription so that users can connect with attorneys for services as well. If you’re looking to begin the process of creating a legal document with TotalLegal, you just have to begin by answering an online interview. Once you create an account you can log in later to revise or download your documents.

If you’d rather have a professional personally help you with your entire estate plan, consider working with a local financial advisor.

TotalLegal Overview
Pros
  • Relatively inexpensive; bundling can help save more
  • Variety of legal documents available
Cons
  • Relatively clunky interface
  • Pricing tiers can be a bit hard to follow
Best For
  • Availability of different kinds of legal documents

TotalLegal: Services & Features

TotalLegal’s services and features are relatively inexpensive but also relatively wide-ranging. In the way of end-of-life and estate planning, the website offers the option of creating a last will and testament, a power of attorney, a living will and a medical power of attorney. If you wanted to create a will, for example, you’d complete the online interview questions, print the document yourself or opt to receive it by mail and then follow the instructions to sign in your state.

Besides this, users can create other legal documents that might be useful for setting up other parts of their lives and assets. Such documents include a bill of sale, name change form, a quitclaim deed, a warranty deed, a rental or lease agreement or a promissory note. TotalLegal also offers business products such as LLC formation and incorporation forms.

For users who wish to pay for a bundle of services instead of buying specific forms a la carte, the website offers a full TotalLegal™ Plan. By subscribing to this plan, users can not only create the aforementioned legal documents, but they can also receive free and discounted legal services from attorneys from the Legal Club of America. Free legal services from these attorneys include consultation, attorney-reviewed documents, free and annually updated will, small claims court service, government assistance programs and attorney letters and calls. Discounted attorney services through this subscription include traffic defense, simple will with trust, Chapter 7 bankruptcy, real estate closing and more. TotalLegal™ offers a useful document storage vault service too, through which subscribers can store and organize copies of all signed legal documents in a secure way, and reprint any document when needed.

TotalLegal: Pricing

TotalLegal’s Fee Structure
Membership Tiers
  • Tier 1: No subscription; documents purchased individually. Prices range from $14.95 to $19.95 for each legal document for estate planning
  • Tier 2: TotalLegal™ Plan – $89/year or $9.95/month
Extra Features
  • Tier 1: Other kinds of documents available to purchase individually; prices vary
  • Tier 2: All legal documents, free and discounted legal services from attorneys, online document storage vault service

For consumers who wish to simply create a last will and testament or other such estate planning document, the forms are relatively inexpensive – at less than $20 for any of those. However, if that’s all that you need, you might be better off searching for another company (such as FreeWill, for example), whose services allow you to create this one document for free.

For those who have more wide-reaching needs and who may need to cover other concerns about property, medical power of attorney or business forms over a longer period of time, the a la carte payment method may begin to add up. Instead of that approach, the company’s TotalLegal™ plan offers a fairly affordable option – at less than $10 per month or less than $90 per year – for the ability to create all of the estate planning, business and other legal documents mentioned above, as well as legal services and secure online document storage. If subscribers to this membership require further attorney services, they will have to pay for them, but can rest assured knowing that they’ll save at least 50% on them, from creating a simple will with a trust to filing for Chapter 7 bankruptcy.

TotalLegal: User Support

With regards to estate planning, TotalLegal allows users to create a last will and testament, living wills and/or a power of attorney. On the company’s website, users must fill out interview questions that then result in the creation of the form. The questionnaire form is divided into parts and users can track their progress so that they know how many sections remain.

If you need assistance while filling out a form or navigating the site, the company has a very thorough help center page where users can find the answers to some frequently asked questions addressing anything from troubleshooting and technical issues to definitions of legal terms and breakdowns of specific rules and concepts.

If you’re looking for immediate support from customer support representatives, TotalLegal has a contact page where it provides an email address and phone number that users can call during most business hours. Inquiries directed to the company through these methods, however, must be of a non-legal nature.

If you need to enlist the services of a professional attorney or even a professional financial advisor, you should do so separately.

TotalLegal: Online Experience

TotalLegal does not have any further mobile or online platforms available through its service, as all the final documents will be available to users once they finalize the questionnaire process on the site. There is no app or other software that a user would need to download.

The website’s interface is relatively simple, but many users may (and have reported to) feel its design and user experience to be somewhat clunky. This has become a point of struggle for many users in relation to understanding the pricing model, which can be hard to piece together unless you spend some time on the website first to parse out the different tiers. On a related note, other users have also pointed out the fact that TotalLegal could be more inclusive, as the website currently only generates documents with the marital designations of “wife” and “husband,” not yet providing documents for same-sex marriages.

How Does TotalLegal Stack Up?

Comparing FreeWill to Other Services
Service Pricing Features Accessibility
TotalLegal
  • $14.95 – $19.95 for legal documents
  • TotalLegal Plan subscription $89/year or $9.95/month
  • Create documents
  • With subscription: Legal services from attorneys
  • With subscription: Document storage vault service
FreeWill
  • $0 / Free for individuals
  • Last will & testament, durable financial power of attorney, advance healthcare directive, charitable contributions
  • No legal services or support
Tomorrow app
  • Mobile app free for families
  • Free for employees covered by employers who buy Tomorrow Plus plans
  • $39.99/year for Tomorrow Plus plan not through employer
  • Mobile creation of estate planning documents, such as will, trust, healthcare directive, power of attorney
  • App allows users to connect with family members and make decisions together
  • No legal services or support
  • Mobile app

The biggest differences TotalLegal has over competitors is its offerings of documents outside of simple estate planning documents, as well as the ability for consumer to connect to Legal Club of America attorneys for further insights.

Bottom Line

Overall, TotalLegal offers a wide selection of legal documents that include business forms and other forms aside from basic estate planning needs. Its individual form offerings are useful if a consumer wishes to buy a few select forms at once, but might not be worth the money if those particular forms are available for free elsewhere. Where TotalLegal is the most cost-effective for users is through its TotalLegal™ Plan, which, aside from necessary legal documents, provides the opportunity for consumers to receive a variety of legal services from attorneys (at different additional price points, where applicable) and secure document storage. This can be a great one-stop shop for all of your estate planning needs as you make sure you have what you need squared away for the future.

Estate Planning Tips

  • If you’re seeking more detailed advice instead of or in addition to your own estate planning steps, consider reaching out to a financial professional. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool connects you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors, get started now.
  • Estate planning is all about looking ahead and mapping out your plan as best as possible. If you’re going the DIY route, make sure you’re aware of the possible financial consequences. Read more about the dangers of DIY estate planning and five estate planning mistakes you can’t afford to make.

Photo credit: TotalLegal

Nadia Ahmad, CEPF® Nadia Ahmad is a Certified Educator in Personal Finance (CEPF®) and a member of the Society for Advancing Business Editing and Writing (SABEW). Her interest in taxes and grammar makes writing about personal finance a perfect fit! Nadia has spent ten years working as a seasonal income tax assistant, researching federal, state and local tax code and assisting in preparing tax returns. Nadia has a degree in English and American Literature from New York University and has served as an instructor/facilitator for a variety of writing workshops in the NYC area.
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How Much Does a Living Will Cost?

How Much Does a Living Will Cost? – SmartAsset

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Confronting our health and what might happen to us someday is not an easy task. Even though estate planning is emotionally challenging, it’s a necessary step to protect yourself. Not only that, without any plans, your loved ones might face unnecessary difficulties. Dealing with the assets alone can be a struggle. You wouldn’t want them worrying about making medical decisions on top of that. So, if you want to prepare for the future, it might be the right time to ask, “How much does a living will cost?”

One of the best resources for estate planning, especially end-of-life planning, is a financial advisor.

What is a Living Will?

A living will refers to a legal document that records your medical, long-term and end-of-life care choices. However, it only comes into play when you can no longer communicate your decisions to your doctors or loved ones.

Unfortunately, there are a variety of scenarios that may require a living will. For example, if you have a degenerative disease or sustain major brain trauma, you likely won’t be able to advocate for yourself. To prepare for that, individuals make a living will while still healthy and sound of mind. Some frequently mentioned directions people put in this document include ventilators, medication and resuscitation.

Factors that Impact Living Will Costs

Your estate attorney will take special care to customize your living will to fit your needs. Those specifications, however, and your circumstances can shift the price needed to make the document. Some of the factors that influence the overall cost include:

  • Location – Attorneys that work in urban areas tend to cost more than those based in suburban or urban spaces.
  • Professional Experience – Lawyers and law firms that specialize in estate planning will cost more.
  • Directive Complexity – The larger and more complicated your living will, the more expensive it will be to complete.

How Much Does a Living Will Cost?

When researching which estate planning attorney to work with, you should know the basic payment system they will use. If you know ahead of time, you can prepare accordingly. Lawyers tend to use either one of two ways: flat fees or hourly billing. However, you also have the option of do-it-yourself (DIY) living wills.

DIY Living Wills

You might be considering ways to avoid any high, professional costs in the first place. If so, a DIY living will is a cost-effective method. You can search online or visit certain stores to get a basic, pre-made form. The only actual cost, then, would be the notarizing price, which you can expect to be only around $10 to $15. That is unless you want a more complicated pre-made form or will-making software. In that case, certain websites might begin to charge you, although it will still be a low cost compared to professional help. The software typically runs from $20 to $100.

However, you should also know that writing your own legal documents comes with its complications and some risks. Your state likely has rules regarding the document’s legitimacy that you may not know. Any mistakes you make hoping to save money may end up costing you more in the long run. Also, a basic will drafted by an attorney is comparable in price to the cost of higher-end software. So, you may be financially safer to choose professional guidance.

Flat-Fee Living Wills

Once you start working with an attorney, you’ll find that they typically have one of two payment structures. A flat flee works like how it sounds. Once you decide to work with an estate planner, they will ask for one “flat” payment. The cost of that payment will depend on the factors mentioned above: location, attorney experience and and the number and type of documents needed. You can expect a low range of $300, with the higher prices easily exceeding $1,000.

However, a flat fee can be beneficial despite how shocking that price tag might be. It demands less work on your attorney’s part since they won’t have to keep track of hours and can just focus on the living will’s assembly. Also, you get to relax once the process has started, knowing you’ve done your part.

Hourly Payment Structure Living Wills

An alternative to the flat fee is hourly billing. This format will also heavily depend on the circumstances. Again, lawyers in high-traffic areas will likely charge more. So, if you’re in the city, you’ll probably find hourly rates above $300. Outside that area, it’ll drop to around $150 an hour.

Remember, a firm or lawyer’s experience and your living will’s specializations may also drive up those prices.

Benefits of Hiring an Attorney

While the online world is a convenient one, it may not provide for all your needs. DIY legal documents often cost less than working with a professional, but that’s because they’re not customized. The form comes as is ,and you simply fill it out to the best of your abilities.

Furthermore, the benefit of working with a person is exactly that. You can have a dialogue with your estate planning attorney, which is more direct than typing questions into a search engine. You can ask your attorney any concerns you may have about a living will or other legal documents. Also, the document they may for you will cater to your needs.

The Takeaway

Living wills are an important step for any individual looking into end-of-life medical and financial planning. The more vulnerable you are, the more essential they become too. If you think you might need to include a living will in your future, shop around for your best options to make one. If you have straightforward wishes, a DIY living will might be enough for you. In contrast, it may be worth speaking to a professional estate planning attorney if there are several complications. Either way, as long as you have a legal living will, you can be sure you and your family are cared for.

Estate Planning Tips

  • A key part of estate planning is figuring out how much you will have to live on. That’s where a free, easy-to-use retirement calculator can be invaluable.
  • Consider working with a financial advisor as you do estate planning. The great thing is that finding a financial advisor doesn’t have to be difficult. Using SmartAsset’s financial advisor matching tool, you can connect with professionals in your area. It only takes minutes for you to have the expert help you need, so get started today.

Photo credit: ©iStock.com/GCShutter, ©iStock.com/designer491, ©iStock.com/zimmytws

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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Key Differences: Living Will vs. Last Will

Key Differences: Living Will vs. Last Will – SmartAsset

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Planning for the later years of your life is often an emotionally taxing experience. However, it’s often scarier to go into the end of our life without a plan. Of course, a plan requires the right legal documents. A living will and a last will may sound like they cover the same territory, but they’re very different; knowing how will help you pick the one that’s best for you or decide you need both. So, with that in mind, here are the main differences between a living will vs. a last will and why they might be useful to you.

Just as important as arranging an estate plan is having a financial plan to maximize the growth potential of your investments. That’s where a financial advisor can be immensely useful.

What Is a Living Will?

A living will is a document that contains the writer’s medical wishes in the event that she or he cannot communicate those decisions. Instances where a person might need a living will include degenerative illnesses or physical incapacitation. So, a living will sets down the wishes of the writer as instructions for the person’s medical and end-of-life care in such scenarios. It takes effect the moment the writer loses the capacity to communicate.

Doctors will refer to your living will to decide your quality of care and which life-sustaining measures to take. For example, you may put a do-not-resuscitate directive in your living will. Other decisions often include the use of breathing or feeding tubes, palliative care or organ donation. It is possible to change or revoke a living will as long as you are capable of doing so.

What Is a Last Will?

A last will and testament is most commonly referred to as a last will. It is a legal document that delegates the distribution of an individual’s property after death. It may also select a guardian for any minor children.

A pre-selected individual, known as the executor, carries out the will’s instructions. That person manages the distribution of assets to your beneficiaries per your wishes.

There are a few types of wills, and the right one depends on your needs. A simple will is the basic form, and it saves your estate distribution and designates care for any minors. However, this type is typically insufficient if you have a large or complex estate.

Married couples often draft joint wills to simplify their estate since it combines their planning into one mutually agreed upon document. When one spouse dies, the other is the sole beneficiary. After the second spouse passes, they usually hand down the remaining assets to their children.

Wills can also differ based on how they’re created. A holographic will is typically handwritten and does not require any signatures other than the owner or testator. There are also oral wills which the individual verbally dictates, usually because they are too ill to write or type it.

Each state has its own rules regarding a will’s legitimacy, and many don’t even recognize holographic or oral wills, so it’s essential to inform yourself on those regulations.

Living Will vs Last Will: Which One Do You Need?

Since a living will and last will function differently, you’re safest when you have both. A living will takes effect while you’re still alive, whereas a last will takes effect after you die. Furthermore, a living will ensures you receive the medical care you desire, and a last will ensures your estate is handled accordingly. So, both cover vulnerable times in you and your family’s life and revolve around different situations.

Even still, certain people are more likely to need one or the other in specific situations. Those going into surgery or who have degenerative diseases, like Alzheimer’s, are most recommended to have a living will in place. If you have minor children or a complex estate, you will need a last will.

Living Will vs. Last Will: How to Create Each Will

Each state varies in its requirements to recognize legal documents. So, researching what your state demands is the safest way to ensure your documents are valid in the eyes of the law.

There are online options that are cheap and relatively stress-free to create; however, they often lack nuance. So, if you have a particularly complicated situation or require a lot of detail in either a living will or last will, it might not address all your requirements.

Alternatively, you can speak with an estate planner or other financial professional. While they may not be as affordable as the online route, a professional can guarantee your document is valid in your state and catered to your specific needs.

The Takeaway

Both living wills and last wills are vital documents for a smooth transition into your later years and even your eventual passing. They preserve and enforce your wishes when you no longer can. With both in place, your loved ones won’t have to make snap decisions in high-stress situations or face unnecessary legal fees to figure out what you wanted. Instead, you can lay it all out for them. If you think a living will or a last will are right for you, consider speaking with an estate planner who can help you get the process started. If you already have one in place, it also might be the right time to check to see if should be updated.

Estate Planning Tips

  • Estate planning on your own can prove a challenge. However, a financial advisor can make that process easier for you. Plus, finding one doesn’t have to be stressful either. SmartAsset’s free financial advisor match-up tool gives you up to three local professionals to contact in just five minutes. If you’re looking for experienced help, get started now.
  • While you’re considering professional help, it’s always good to stay informed on your own as well. An estate tax is part of estate planning, so make sure you know whether your state has an estate tax or if you’re subject to the federal version.

Photo credit: ©iStock.com/shapecharge, ©iStock.com/Duncan_Andison, ©iStock.com/kupicoo

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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Living Will vs. DNR: Key Differences

Living Will vs. DNR: Key Differences – SmartAsset

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When planning for the future, it’s common to think of what you’ll do with your estate and assets. However, there is more to consider than just your financial situation. You have to take into account your health and well-being, too. That’s where advance medical directives come in. By drafting one, you can ensure you and your body are well taken care of even when you can’t. There are two common ways to employ a medical directive: a living will and do-not-resuscitate (DNR) orders. A financial advisor can help you sort through the pros and cons of both options.

A Living Will Explained

A living will is a legal document that dictates your personally approved medical decisions for future, long-term and end-of-life care. It records your wishes as instructions for your doctors to follow in the case that you can’t communicate them. So, this only comes into play when you’re incapacitated. That can result from a degenerative disease you may have, such as Alzheimer’s, which is terminal. Or, it could be necessary in case you suffer severe brain trauma. Either way, the living will preserves your wishes for how you want to handle those scenarios.

Often, a person will use the document to approve or disapprove life-sustaining procedures. This can include measures like breathing tubes, medication intake and dialysis.

You draft the living will while you’re still sound of mind and body. As long as you’re mentally fit, you can change or revoke the document at any time. However, they’re often made in combination with a power of attorney for healthcare. This is an individual who you choose to make medical-related decisions on your behalf. If you want to change your living will, you should inform your POA for healthcare.

Do-Not-Resuscitate Order Explained

Although you may see a DNR floating in the same conversations as a living will, they are not the same. A DNR is essentially a medical document that tells your doctors what to do if your heart or breathing stops. In this case, it asks the medical professionals not to revive you using cardiopulmonary resuscitation. A DNR is usually only for the chronically ill, frail and elderly. This is because of two main reasons.

The first is that resuscitation can be physically traumatic and even lead to broken ribs or punctured lungs – damage that is difficult for certain groups. The second reason is that resuscitation may require medical intervention the patient otherwise did not want. Moreover, a natural death can be easier to accept.

Living Will vs. DNR: Key Differences

It’s vital to know the difference between a living will and a DNR as you do your estate planning. This is even more important for aging and ill individuals or those considering their estate plans.

So, to review, a living will and a DNR are two different documents. The former is a legal document, while the latter is a medical one. Their main similarity is that they both provide instructions for your doctors and loved ones to follow when you can’t properly communicate. A living will provides an outline of medical procedures that you either do or do not want. Also, it usually involves life-sustaining treatment and end-of-life care, which is more complex than a DNR. In contrast, a DNR focuses on a single medical procedure and typically does not require a living will, although a DNR can be included in the other.

Living Will vs. DNR: Which One Do You Need?

If all you want or require is a DNR or a do-not-intubate (DNI), you only need a DNR. You do not have to pursue a living will as well. However, if you have certain pre-existing conditions or have complicated desires for your future medical care, a living will is valuable insurance. It will protect your wishes when you are not in the position to do so. On top of that, a living will can support spiritual, religious, or otherwise personal medical decisions as well.

The Takeaway

While estate planning comes with its difficulties, it’s better to face it head-on. When you decide if you need a DNR or living will, you take a weight off of your and your family’s shoulders. Since medical and end-of-life care is so personal, you avoid family stress and upset by making the decision ahead of time. If you think either option might be right for you, discuss your choices with your family and doctor. Keep in mind that another option is what’s called a medical order for life-sustaining treatment. You can also speak with an estate planning attorney to discuss your living will options.

Tips for Estate Planning

  • Income in America is taxed by the federal government, most state governments and many local governments. The federal income tax system is progressive, so the rate of taxation increases as income increases. A federal income tax calculator can give you a quick read on what you owe Uncle Sam.
  • Consider working with a financial advisor as you do your estate planning. Finding one doesn’t have to be hard. With SmartAsset’s financial advisor match-up tool, you can get connected with local, experienced advisors in minutes. If you’re ready for the help you deserve, get started now.

Photo credit: ©iStock.com/kupicoo, ©iStock.com/svetikd, ©iStock.com/courtneyk

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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How to Make a Will for Free

How to Make a Will for Free – SmartAsset

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Estate planning can be an overwhelming process, emotionally and mentally. The prices to work with a financial professional certainly don’t help either. These days, it’s possible to find free templates and do-it-yourself kits online that make estate planning more affordable. While after-life planning can be complicated, you may not need to spend money on an estate planning attorney. If your estate is simple, it might be worth investigating how to make a will for free instead. A financial advisor can help you sort through your options for making an estate plan.

Identify a Free Will Template

Your first step is to choose how you’ll obtain the template for your free will. You can either search online for resources that provide a template or work through a reputable legal resource. Often you will find that online services charge little to nothing for a will template, although that price can increase if you want a package with more documents.

Online resources like Freewill.com, a nonprofit site, can also offer forms for advance healthcare directives and durable financial power of attorney. You can alter these forms when you want, but keep in mind you’re responsible for destroying or editing the previous version if you do.

Decide How You Would Like to Distribute Your Assets

Having the form is one thing, but you need to reflect on your distribution wishes carefully. Your will should accurately reflect them. That also requires you to be aware of your assets. So, familiarize yourself with everything that comprises your assets and think about how you want them handled. When you detail the allocation in your will, you should set specific instructions for your beneficiaries. This measure will help your loved ones avoid court costs and in-fighting that can result when a will is too vague.

You also have the option to include varying levels of contingency in your will. For example, you can choose your spouse to receive a certain percentage, but specify that your particular friend will receive it if they don’t outlive you. You can then create a chain of succession. This allows you to minimize updating your will.

Select Someone to Fulfill Your Wishes

When you draft a will, you need to select an individual to execute it. The person will be in charge of seeing your wishes communicated and carried out. The title of this person can change depending on the state. Although you will see them typically called executors, they may also be titled administrators or a personal representatives. Your executor should either be a close, trusted individual in your life or a professional fiduciary.

That way, you can ensure your estate will be administered appropriately and the person you’ve left to do it will have your best interest in mind. If you choose someone close to you, make sure they can handle the emotional stress that may come with the position. So, speak to your candidate(s) beforehand about your expectations and the contents of your will.

Make Sure Your Will Fulfills All Legal Requirements

Each state demands different requirements to recognize your will. These guidelines can include recognized formatting, minimum asset distribution and rules regarding your witnesses. A will can be made invalid for numerous reasons, so it’s important to be careful when drafting yours.

For example, if you or any of your witnesses are deemed mentally incompetent, that can invalidate your will. Or, you if have multiple wills, they can come into conflict with one another.

Share Your Wishes With Your Family

If your will’s executor is someone from your personal life, you should talk to him or her about your distribution wishes. Similarly, you’ll want to talk with your family about your plans as well. Since they are the ones who will have to deal with your loss and the estate as your beneficiaries, they should know what waits. You should also communicate to them where you keep copies of the will.

If your original copy is with an estate planning professional or attorney, have their contact information accessible to your spouse or executor.

Is a Free Will Sufficient for My Needs?

If your estate and its distribution are very straightforward, a free will might suit your needs. As long as you research that the template works with your state regulations, you shouldn’t experience any legal ramifications. However, the more complicated your will needs to be, the less suitable it is for a free will format.

If you have a complicated family background, such as children from multiple marriages, have a diverse investment portfolio or generally have complex distribution wishes, a free will likely won’t work for you. While they are affordable and accessible, they’re not customizable to your needs. If your will is not written correctly, has gaps or is vague, your family may have to contest it in probate court. This would lead to legal costs and emotional damage that a will is supposed to prevent. However, don’t be afraid to bring a free will you’ve worked on to your estate planner or attorney. That document can be a good place to start.

The Takeaway

Free wills are a valuable resource for those with simple estates. They can even be valuable starting points for someone new to estate planning. However, they have their limits. An individual with complex distribution wishes will find that a free will doesn’t accommodate all their specific needs. Even more, if it isn’t completed properly or has gaps, it might become invalid, which could lead to probate court. When you write your will, you want to finish it knowing that it does exactly what it’s supposed to do: protect you and your loved ones. Your will’s validity influences that.

Estate Planning Tips

  • Consider working with a financial advisor as you create or modify your estate plan. Finding one who’s ready to address your needs doesn’t have to be hard. With SmartAsset’s free matching tool, you can locate financial advisors in your area who can help you achieve your financial goals. If that sounds like the help you need, get started today.
  • A key part of estate planning is assessing your need for life insurance: how much and what type of policy. A life insurance calculator can give you a quick estimate of what you should consider buying.

Photo credit: ©iStock.com/fizkes, ©iStock.com/ridvan_celik, ©iStock.com/yongyuan

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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Key Differences: Living Will vs. Power of Attorney

Key Differences: Living Will vs. Power of Attorney – SmartAsset

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Hard choices wait around every corner as you age, but some of the most difficult ones are about your own care. Without a plan in place, you might not be able to convey your wishes to those around you, leaving loved ones scrambling to make the right decision. Fortunately, there are several ways you can ensure your choices for your medical and end-of-life care are understood. A living will and power of attorney are two of these ways. But what’s the difference between them and how do you know which one is right for you?  If you’re beginning to plan your future care, here are the key differences between a living will vs. a power of attorney.

End-of-life planning includes properly arranging your financial affairs, which is where a financial advisor can be immensely helpful.

What Is a Living Will?

Living wills have several names, such as healthcare directives, instruction directives and declarations. So, you may see it under various titles, but its purpose remains the same. A living will is typically a written statement that ensures any medical or healthcare-related decisions you’ve made are carried out. It only comes into play when or if you can’t advocate for yourself or vocalize those wishes.

For example, you may suffer physical trauma or have a degenerative disease like Alzheimer’s. Both of these situations can lead to lost brain activity and incapacitation. So, you’ll need something in place beforehand that protects your choices regarding long-term or end-of-life medical care. Your living will might cover some decisions, including resuscitation, feeding tubes, assisted breathing and other life-prolonging measures. It may also be possible to put in instructions based on your religious or philosophical beliefs.

Since a living will only comes into play while you’re alive (but incapacitated), it ends when you die.

What Is a Power of Attorney?

Like a living will, a power of attorney (POA) is another important document that protects your interests when you cannot. However, it uses a different method to accomplish that. A power of attorney authorizes a trusted individual that you (the principal or grantor) have chosen to make decisions on your behalf. Although you may also see them with titles like proxy, surrogate and attorney-in-fact, this person is often called the agent.

Essentially, a power of attorney does not include a written guide on your preferred care but picks someone to make those choices when they arise. However, unlike a living will, a POA comes in more than one form.

Other Types of Powers of Attorney

A general power of attorney can have a broad range of power depending on your needs. For example, if you leave the country for an extended period, but you have business ventures or investments to take care of, you might give someone power of attorney over them. Specific situations might call for a specialized version of the document. You can alter when the document takes effect if you make it a durable or springing power of attorney.

A durable POA activates the minute you sign the document. After that, the agent assumes his or her position and retains it, even if you become incapacitated, until your death. In contrast, a springing POA only takes effect after you can longer advocate for yourself.

On top of activation, you can also shift the intent by drafting a power of attorney in financial situations or a power of attorney for healthcare. Either way, the agent makes decisions on your behalf. A financially focused POA can allow someone to pay bills, operate your business or even move assets, but they always have to act in your best interest.

Naturally, a POA for healthcare handles your medical care. Their duties can include accessing medical records, deciding course of care and dealing with the employment of your doctor or medical care professionals.  If you are considering a power of attorney for healthcare, it might be worthwhile to pursue a financial one as well. That way, your executor can access capital and use it to improve your quality of life.

It’s important to note that you can revoke your POA at any point; you just have to inform your attorney-in-fact and address the document. You may have to amend it or destroy it altogether, depending on your plans.

Living Will vs. Power of Attorney: Which One Do You Need?

A living will preserves your wishes in writing, while a POA empowers a person to make those decisions. Which one you need depends on your situation.

Keep in mind that each state has different rules regarding estate planning. You may find that you live in a state like Pennsylvania, which uses a document known as an advance healthcare directive. This document combines a living will and durable power of attorney for healthcare, negating the need to choose between the two. It’s also possible to determine your state’s specific requirements to make your living will or power of attorney valid.

It can be challenging to navigate this alone, so speak to an estate planner who can help you ensure your documents are legitimate. They can create a custom directive suited to your needs, which will help you avoid these issues from the get-go.

How to Choose an Agent

Generally, people choose their spouse, a trusted friend or a knowledgeable family member to act as their agent. However, you want to make sure this individual will do right by you and can handle difficult decisions. End-of-life care is an emotional topic for family members, and it can stir disagreement. So, choose an agent who will ensure your wishes are kept even amidst arguments.

Speak with your chosen executor early on. Talk with him or her about your wishes before and even after you put them into writing. The person should also receive a copy of your power of attorney once it’s written and know the location you keep yours in, which should be a secure location like a safety deposit box. You may want to consider bringing a copy to your physician and other family members, like a spouse, as well.

The Takeaway

Planning for the end of your life is a personal process and emotionally taxing. A living will and power of attorney can make it easier for you and your loved ones by handling the hard decisions beforehand. The safest route is to have plans in place to rely on for any situation. Since you can’t predict every scenario in a living will, a power of attorney can help close any gaps. So, your agent can have the living will to rely on and refer back to when they need to make real-time decisions. However, you might not need to pursue two separate documents depending upon your state.

If you are looking into a living will, power of attorney or both, research the requirements and reach out to an estate planning attorney. They can help you create a customized document suited to your medical care needs. That way, you and your loved ones can rest easy knowing that everything will be taken care of as you age.

Estate Planning Tips

  • Even though you may not need a power of attorney now, don’t wait to make a financial plan. That’s where a financial advisor can offer expert advice. Finding an experienced financial advisor doesn’t have to be hard. SmartAsset’s matching service can connecct you to several advisors in your area in minutes. If you’re ready, get started now.
  • If you take the path of a power of attorney, your agent might have to make financial decisions for you. That includes choices for your retirement accounts and 401(k). Use our free 401(k) calculator to estimate how much money your account will have by the time you retire.

Photo credit: ©iStock.com/zimmytws, ©iStock.com/AndreaObzerova, ©iStock.com/Chawich Udomsatapol

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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FreeWill Review: Pros & Cons

FreeWill Review: Pros & Cons – SmartAsset

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FreeWill is an online estate planning tool that allows you to create or update a legally binding will in as little as 20 minutes. It offers products such as the ability to document funeral wishes, create a durable financial power of attorney, advance healthcare directives (living wills) and give charitable contributions from your retirement or stock brokerage account. As the company’s name implies, FreeWill’s services are completely free. Funding comes from FreeWill’s partnership with more than 100 nonprofit organizations who sponsor these services. You can access the service online, giving users the ability to change or download their will at any time without needing to create a new one.

If you’d rather have a professional personally help you with your entire estate plan, consider working with a local financial advisor.

FreeWill Overview
Pros
  • Fairly robust service for free
  • Online access – Once you create you can update at any time
Cons
  • No live support
  • Relatively smaller range of products
Best For
  • Cost (free)
  • Charitable giving

FreeWill: Services & Features

For a completely no-cost service, FreeWill’s offerings are fairly robust.

First, it can cover an individual’s most important needs for a last will and testament. The website offers a questionnaire via an easy-to-use interface, asking basic information as well as other pertinent details such as current income, family information and whether users have any children or pets that they’d like to cover in their will.

For users who need to create an advance healthcare directive (also known as a living will), filling out the form will involve answering questions about some personal information, selecting a preferred physician and hospital for end-of-life care as well as selecting an agent or healthcare proxy. Then users can share what they need to about the values they wish to be upheld and other specific instructions, before finalizing with signatures and any further instructions specific to their state.

For a durable financial power of attorney, individuals will need to provide some personal information and also select an agent or agents to make financial decisions for them if they become unable to do so. Then users can choose the powers that any agent(s) will be allowed to exercise, list any specific limitations and provide other important details (i.e. compensation, monitors, guardians, revocation and how documents will be executed).

Additionally, in keeping with its commitment to charitable giving, FreeWill offers individuals ways to give a charitable contribution from a retirement account or a stock brokerage account.

FreeWill: Pricing

FreeWill’s Fee Structure
Membership Tiers
  • $0 / Free for individuals
Extra Features

FreeWill’s pricing model is straightforward, as it is free to use for individuals. As an individual user, you can draft your will, durable financial power of attorney or advanced healthcare directive via the website.

Funding comes from FreeWill’s partnership with more than 100 nonprofit organizations who sponsor these services. Nonprofit organizations can learn more about a range of tools that FreeWill offers – like a Bequest Tool, a Qualified Charitable Distributions (QCD Tool) and a Stock Gifts Tool – in order to make gifts easier for both supporters to give and organizations to receive.

FreeWill: User Support

FreeWill’s website offers a streamlined design that’s fairly easy to use. For a last will and testament, its questionnaire form is divided into parts and users can track their progress so that they know how many sections remain to fill out. For services such as advance healthcare directives and durable financial power of attorney, the site outlines the form sections and the information you’ll need to gather before you begin.

If you’re looking for immediate support from customer support representatives, FreeWill unfortunately does not provide this kind of a feature. It does, however, have a contact page as well as a help center page where users can find the answers to some frequently asked questions addressing troubleshooting and technical issues.

Thanks to insight from experts around the country, FreeWill makes sure that a user’s will complies with each state’s specific legal requirements. Of course, FreeWill makes it clear that it is not a law firm and therefore cannot provide legal advice. If you need to enlist the services of a professional attorney or even a professional financial advisor, you should do so separately.

FreeWill: Online Experience

FreeWill does not have any further mobile or online platforms available through its service, as all the final documents will be available to users once they finalize the questionnaire process on the site. There is no app or other software that a user would need to download. Given the company’s no-cost pricing model, this is probably to be expected.

How Does FreeWill Stack Up?

Comparing FreeWill to Other Services
Service Pricing Features Accessibility
FreeWill
  • $0 / Free for individuals
  • Last will & testament, durable financial power of attorney, advance healthcare directive, charitable contributions
  • No legal services or support
TotalLegal
  • $14.95 – $19.95 for legal documents
  • TotalLegal Plan subscription $89/year or $9.95/month
  • Create documents
  • With subscription: Legal services from attorneys
  • With subscription: Document storage vault service
Tomorrow app
  • Mobile app free for families
  • Free for employees covered by employers who buy Tomorrow Plus plans
  • $39.99/year for Tomorrow Plus plan not through employer
  • Mobile creation of estate planning documents, such as will, trust, healthcare directive, power of attorney
  • App allows users to connect with family members and make decisions together
  • No legal services or support
  • Mobile app

The biggest differences FreeWill has over competitors is its emphasis on charitable giving and its free services as a result of that.

Bottom Line

Overall, FreeWill is an easy-to-use website that helps those who are looking to have an official last will and testament the ability to create a simple one using their online forms. The service – including certain other end-of-life planning forms such as a durable financial power of attorney or a living will – is free to use for individuals, with an emphasis on charitable giving driving the company’s ethos and business model. While 24-hour support or live customer representative or legal support is not available with free will, its website allows users to create an account, begin and have their specific forms in just minutes – and also allows them to log in, update and download forms again at any time.

Estate Planning Tips

  • If you’re seeking more detailed advice instead of or in addition to your own estate planning steps, consider reaching out to a financial professional. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool connects you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors, get started now.
  • Estate planning is all about looking ahead and mapping out your plan as best as possible. If you’re going the DIY route, make sure you’re aware of the possible financial consequences. Read more about the dangers of DIY estate planning and five estate planning mistakes you can’t afford to make.

Photo credit: FreeWill

Nadia Ahmad, CEPF® Nadia Ahmad is a Certified Educator in Personal Finance (CEPF®) and a member of the Society for Advancing Business Editing and Writing (SABEW). Her interest in taxes and grammar makes writing about personal finance a perfect fit! Nadia has spent ten years working as a seasonal income tax assistant, researching federal, state and local tax code and assisting in preparing tax returns. Nadia has a degree in English and American Literature from New York University and has served as an instructor/facilitator for a variety of writing workshops in the NYC area.
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Source: smartasset.com