Protect Your Family with Important Estate Planning Documents

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By on December 20, 2016 in Retirement with 0 Comments

Rolled up scroll of last will and testament fastened with natural brown jute twine hemp rope, sealed with sealing wax and stamped with alphabet letter B

This time of year can be very hectic, but is also a time that we are thankful for our family and friends. It is also a good time to make sure that you are protecting your family with proper estate planning for when you will no longer be here.

How many times have you said to yourself: “I really need to get a will?” Have you also considered what would happen if you didn’t die but were unable to make decisions on your own?

If you have children, teach them the right way to live their lives. Teach them about integrity and compassion. Encourage them to get the best education possible and give them space to make their own decisions.

Listed below are important documents that you should have. I will save what may be the most important documents – “Beneficiary Documents” for last, including specific documents for federal employees.

  1. Will – This is the primary document used to transfer assets, other than assets based through beneficiary documents, when you die. This is relatively inexpensive to acquire, but in some cases may result in probate which can be timely and expensive.
  2. Durable Power of Attorney – This will give someone the authority to make legal and financial decisions should you become incapacitated. You are still living but you may have had a major accident or a major illness, and you are unable to manage your financial affairs. It is important to appoint someone you really trust since this person will be managing your assets.
  3. Medical Power of Attorney or Healthcare Proxy – This document will enable an adult you designate to make medical decisions on your behalf should you become unable of making them yourself.
  4. Advanced Healthcare Directive or Living Will – This specifies your wishes for end of life care – whether you want life saving techniques used – life support systems, or other measures taken to extend your life.
  5. HIPPA Release Form – This will allow individuals named in your Advanced Healthcare Directive or Power of Attorney for asset management to have access to healthcare information to deal with insurance matters.
  6. Living Trust – When assets are transferred via the trust there is more confidentiality, less cost, more flexibility with distribution preferences, and faster distribution and your wishes are less likely to be probated.
  7. Beneficiary Documents – Beneficiary designations supersede the will for retirement accounts such as TSP, IRA, Roth IRA, 401(k), life insurance, annuities, as well as life insurance and annuity contracts. A number of financial institutions have forms on other types of accounts and you can designate who you want to receive the funds when you die through “Transfer on Death” or “Payable on Death”. It is important to keep a copy of your beneficiary documents in a safe place. If you don’t have copies of these documents or aren’t sure who you named as a beneficiary, simply ask the financial institution for a new beneficiary form. Then complete to designate both primary beneficiaries and contingent beneficiaries (if primary beneficiary is deceased, or refused the inheritance at the time proceeds are paid).

Beneficiary Documents Applicable to Federal Employees

  • SF 1152 – If you should die while still working this designates who would receive your unpaid compensation and annual leave.
  • SF 3102 – If you are single, complete this form under FERS, to designate who would receive your annuity contributions.
  • SF 2808 – If you are single, complete this form under CSRS, to designate who would receive your annuity contributions.
  • SF 2823 – Designates who will receive your FEGLI
    • If a minor is a beneficiary, FEGLI will not release funds until a guardian is appointed by the court. If there is no guardian, FEGLI will hold proceeds and pay to the minor beneficiary at the age of majority.
  • TSP 3 – Designates who will receive the proceeds from your TSP
    • Only a spouse can keep funds at TSP by way of a Beneficiary Participant Account (BPA). If spouse passes away before funds are depleted the remaining balance will pass to BPA’s beneficiaries but cannot be rolled over. Proceeds will be paid outright and fully taxed at the beneficiary’s tax rate.
    • A beneficiary whom is not a spouse can rollover proceeds to an inherited IRA at a financial institution.
    • If a minor beneficiary is listed, proceeds will be paid to the minor. (If you feel that the minor would not make sound financial decisions, then a trust as a beneficiary can specify how and when you want the minor to receive proceeds).

FedSavvy® does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that could have tax consequences. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.

© 2017 Carol Schmidlin. All rights reserved. This article may not be reproduced without express written consent from Carol Schmidlin.

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About the Author

Carol Schmidlin is the President of Franklin Planning and has been advising clients on how to grow and preserve their wealth for 20 years. In addition to her financial planning practice, she is the founder of FedSavvy® Educational Solutions, which provides Financial and Retirement Literacy Programs for Federal Employees. Follow FedSavvy® Educational Solutions on Facebook for the most up to date information. Contact Carol at (856) 401-1101 or visit FranklinPlanning.com.

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