Wes Moss: Estate planning not just for the rich

Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.

The ongoing political debate over federal estate taxes has put the spotlight on estate planning. For the current year, there has been no estate tax. But unless Congress acts, the “death tax” will return to pre-2002 levels in 2011. Regardless of what happens in Washington, you need to have an effective estate plan in place.

Estate planning may be the most difficult topic to discuss with your CFP® Professional. Who wants to talk about death? However, it is an important financial issue that you must address, regardless of your personal wealth. Failure to craft a detailed estate plan can result in untold pain and suffering for those you leave behind – confusion, fighting, legal action, even the loss of a thriving family business. That’s not the legacy you want to leave!

Most of these situations can be avoided with minimal effort and cost by using the basic tools of estate planning:

A Will – Every adult should have a will. This is where you outline to whom which assets are being left and for what purpose. Your will is your lasting statement at your passing, so use it effectively. It should provide for the orderly distribution of all real and personal property, arrange for the care of your kids, and by default, a will helps to reduce the overall probate costs for your heirs. The more detailed the better – earmark your bequests for specific purposes, such as paying for the grandkids’ education or building a new gym for the church.

Financial Power of Attorney – If something happens to you and/or your spouse, will the bank allow your son to access your accounts to pay your bills? Not unless his name is on your Financial Power of Attorney. This document lists the people who are authorized to access your funds in the event of your incapacitation. It also gives them the ability to make adjustments to your estate plan should laws and regulations change while you are unable to act for yourself.

Advance Directive for Health Care – Remember Terry Shiavo, the Florida woman whose family battled for months over whether she should remain on life support? Can you imagine putting your loved ones through something like that? An ADHC, which combines a healthcare power of attorney and a living will, goes a long way toward preventing that nightmare. Mark Brandenburg, an estate attorney for Cohen & Caproni, LLC in Sandy Springs, says, “Choosing a family member to serve as a health care agent prior to incapacity can avoid the delay, expense and emotional toll of petitioning for a court-appointed guardian.”

In my experience you can get a basic will with a Financial Power of Attorney and a Health Care Directive for somewhere between $800 and $1500. It’s also possible to start with just a basic will for much less and then gradually create the other documents. Overall, this may seem like a lot of money, but it’s an investment guaranteed to pay massive financial and emotional dividends. Get it done today. It’s an incredibly important gift that you can give to your family this holiday season.

- By Wes Moss, Atlanta Bargain Hunter blog