By Randy D. Jaramillo, FRC℠

If you’re like many pre-retirees, your primary focus is on your eventual retirement income. Saving money, asset allocation, and regular portfolio rebalancing are all important. But often, pre-retirees forget about estate planning.

Even if you think you have a solid estate plan, there’s a good chance you may be missing something. Take a closer look at three key documents that many pre-retirees either don’t have or don’t have right.

1. An Advance Directive

In Indiana, an advance directive is technically made up of two separate documents:

• An Appointment of Health Care Representative (HCR)
• A living will

Your HCR is a trusted person you want to make medical decisions for you if you become incapacitated or unable to communicate. You only want to choose someone to be your HCR if you feel confident that they can act in your best interests and follow your wishes. Your chosen HCR should also be comfortable communicating your wishes to healthcare providers.

Your living will is a clear outline of treatments and procedures you consent to (and don’t consent to). Although it’s generally advisable to discuss your wishes with your HCR ahead of time, your living will may also serve as a guide if your representative isn’t sure how to handle a given situation.

Many people create advance directives and then neglect to fully execute them. When this happens, your wishes aren’t legally enforceable. Indiana requires you to either notarize your documents or sign them in the presence of two adults. Notarization is typically less likely to lead to legal challenges down the line.

2. A Durable Financial Power of Attorney

What happens if you suffer a medical emergency and can no longer manage your own finances? When you have a durable power of attorney, you know that someone you trust is ready to handle your money on your behalf. The term “durable” means that your power of attorney document remains in effect after you become incapacitated. 

If you don’t have a durable power of attorney, the court generally must find you to be legally incapacitated before anyone may step in to handle your finances. This process can be lengthy, and in the meantime, your money may go completely unmanaged.

When creating your document, it’s vitally important to list the specific powers you’re granting to your agent, or the person you’ve chosen to handle your finances. This helps avoid confusion and possible abuses of power.

3. A Living Trust

Most pre-retirees tend to already have a will. However, if you leave a will and don’t have your assets in a trust, your loved ones may have to go through the long, public, and often expensive probate process. 

During probate, the court validates the will and oversees asset distribution. Probate fees can erode the value of an estate very quickly, and beneficiaries may have to wait an extended period of time before receiving an inheritance. 

A living trust may help your family avoid probate entirely. A trust is a legal entity that “holds” your assets. Because assets technically belong to the trust, they aren’t normally considered part of your estate, and they don’t go through probate.

Looking for Help With Estate Planning?

Losing a loved one is always tragic. But if you don’t have a comprehensive estate plan, your loved ones’ grief may be compounded by confusion, stressful probate proceedings, and even unnecessary taxes.

At Reliant Advisory Group, we work to provide each of our clients with custom-tailored financial and estate plans. Our team is committed to the principle of putting people over profits. Whether you need to create an estate plan for the first time or want to update your existing one, we want to hear from you. 

To schedule a complimentary review, call (888) 575-9109 or get in touch online.

Frequently Asked Questions

What estate planning documents should every pre-retiree have?

While every situation is different, many pre-retirees benefit from having an advance directive, a durable financial power of attorney, and a living trust in addition to a will. Together, these documents can help address healthcare decisions, financial management during incapacity, and the transfer of assets according to your wishes.

Is a will enough for estate planning?

A will is an important part of an estate plan, but it may not address every need. For example, a will generally does not avoid probate, and it doesn’t authorize someone to make financial or healthcare decisions if you become incapacitated. Reviewing your estate plan periodically can help identify whether additional documents may be appropriate for your circumstances.

When should you review or update your estate plan?

It’s a good idea to review your estate plan after major life events such as marriage, divorce, the birth of a grandchild, retirement, or a significant change in your financial situation. At Reliant Advisory Group, we help clients coordinate their financial plans with their estate planning goals so their overall strategy reflects their current wishes and long-term objectives.

About Randy

Randy Jaramillo is the Managing Partner of Reliant Advisory Group, leveraging over 20 years of experience to provide retirees with a “Financial GPS” that simplifies complex wealth and tax strategies. Based in Indianapolis, he uses his background in missionary service to offer a “people over profits” approach focused on preserving assets and building hope for the future. Outside the office, Randy is an active church member who enjoys the discipline of golf and chess.