Never too soon to start planning
Because of hardships endured in her past, Karolin Lex decided to enter a career that would help her keep others from experiencing the same struggles.
Her mother died at age 45 -- much younger than expected. And as if that wasn't enough of a shock, her dad lost his life to a massive heart attack only nine days later.
"Our lives were just sent into a bit of chaos right then and there," Lex said of her and her six siblings. "Things were not set up right because people don't think they're going to die when they're 45 years old."
Although it should have taken just a year to get her parents' estate settled, the process lasted five years because things weren't properly prepared. For that reason, Lex became a financial advisor with Ameriprise Financial in Zumbrota and is now able to help others on arranging their financial affairs.
"I really believe that you're never too young to set up an estate plan," she said.
At a presentation she gave Monday in Cannon Falls, Lex outlined a few basic estate planning documents she recommends people have, no matter their age: durable power of attorney, healthcare directives, will and letter of instruction.
Durable power of attorney
When you designate someone to serve as your power of attorney, they, in effect, step into your shoes. A durable power of attorney remains in effect when you become incapacitated or incompetent.
A power of attorney is only effective while you are still alive.
"I think that the power of attorney is one of the most important pieces that you can have while you're living," Lex said.
The person you select as your durable power of attorney should be someone you trust to carry out what you want. Although it is entirely your choice what they have control of, some of what you may want to authorize them to do on your behalf would be things like pay everyday expenses, collect benefits, monitor your investments and file taxes.
Healthcare directives allow you to do two things: Appoint a healthcare agent to speak on your behalf and make healthcare decisions for you, and express your wishes in regards to medical treatment when you are unable to do so yourself.
You do not, however, have to name an agent and list your wishes for the healthcare directive to be effective. Doing either is sufficient. But, by both listing an agent and identifying your wishes, you help provide your agent with guidance to act on your behalf.
Lex explained how one family she worked with was disputing on the decision of whether or not to keep a woman on life support. While the woman's children wanted doctors to do everything necessary to keep her alive, the woman's husband didn't think she would want that.
With a healthcare directive, the woman would be able to choose for herself what is done as she nears the end of her life.
In order to disburse your property in the manner you choose, a will is a vital component in estate planning. Without one, disbursements will be made in accordance with state law, which may not conform to what you would have wanted.
A will allows you to name a personal representative to manage your estate and name a legal guardian for any minor children you may have.
Since a will is a legal document, it is important that it be carefully written and properly executed in accordance with state law in order for it to be valid.
Letter of instruction
The letter of instruction is an informal letter that allows you to list all of your assets. It can also provide information about your burial wishes and where other important documents, such as your will, are located.
"It's good to have a list of all your assets and where they're held," Lex said.
The letter of instruction is not a legal document, and thus, remains private, Lex explained.