There are six important components to an estate plan, THE WILL. The first and well-known component of an estate plan is a will. A trust is a legal agreement in which a trustee holds the assets of a grantor for the benefit of a beneficiary. So instead of having assets in your name, you can keep them in a trust.
Trusts are useful for estate planning because they can help keep your assets out of probate, which can be a time-consuming and costly process. A trust can also set detailed rules for when and how beneficiaries receive their inheritance. A will is a public document after it is filed with the court. Similarly, if you are incapacitated, anyone who wants to manage your affairs must go to court to gain control of your assets.
On the contrary, a trust can eliminate the need to create public records. A comprehensive estate plan includes a specific plan for getting the treatment you would want when you can't make or communicate decisions, no matter how old you are. Without proper health care directives, you may not get the treatment you want. Designations of beneficiaries in things such as retirement accounts supersede any instruction in your will or trust.
This is because assets that go to a designated beneficiary generally do not become part of your estate or trust. They go directly to the beneficiary. Some of the most common documents include a last will and will, a power of attorney, a living will, and a power of attorney for health care. Some people also need one or more trusts.
Insurance policies could also have a place in your estate plan. The specific documents required depend on your circumstances. Living Wills, Health Care Representatives, %26 Advance Health Care Directives. Retirement plans, such as 401 (k) workplace plans and individual retirement accounts.
For many people, the will may be the first thing they think about when putting together an estate plan. This document sets out your wishes about who will take what assets after your death. You should also indicate the wishes of who will take care of the small children or pets you have in your care. As a lesser-known document, it provides the legal backbone for your will.
A trust designates how your beneficiary (or beneficiaries) should manage your assets once they receive them through your will. There are several types of trusts that can affect the taxes that apply to these assets. If you become incapacitated, a power of attorney grants someone permission to make decisions on your behalf. When assigning a power of attorney to someone, you must be sure that they will try to act in their best interests.
You can assign a medical, legal or financial power of attorney to the same people or to different people. Although decisions about your health are handled by the person who has a medical power of attorney, you can establish certain health care directives that act as a “medical will” if you are incapacitated. Having helped people in Edmond and the surrounding regions for over 30 years, our team is experienced in all types of financial and investment planning, including estate planning. Inventory everything you own, from cars to collectibles.
Think about whether you have adequate life insurance to leave your family in a position where they can support the life you currently lead. If you assign a health care power of attorney in your estate plan, make sure they are aware of your liability. Perhaps the biggest benefit is that if you don't prepare properly for what should happen in the future, while you're healthy and empowered, you won't have a say in how your wealth is managed or what your loved ones will receive when that time comes. Even though you can leave all your assets to your spouse without paying estate taxes, you must establish a referral trust for your children.
A living will or other medical directives must be included in your estate plan if you have very specific instructions for your medical care. Previously, properly preparing the types of documents included in an estate plan could cost you thousands of dollars. The rest of your estate may be left to your tax-exempt spouse while naming your children as final beneficiaries. If your estate is small and your wishes are simple, an online or bundled will writing program may be sufficient for your needs.
Do not make donations during your lifetime to reduce the value of the estate after approval (tax advantages). Estate planning is the process of designating who will receive your assets in the event of death or disability. Health directives and longer-term health care wishes are perfect examples of this: If you ever become incapacitated and unable to make your wishes known, your Estate Plan will speak for you, so your loved ones don't have to make unthinkable decisions or wonder what you would want. Your will can contain many different components, so to make sure it covers everything you need, you should work with an estate lawyer.
It's always best to add a power of attorney to your estate plan so that you name who you want to take care of your affairs. You don't need to be rich or elderly, or even have a specific amount in your bank account to justify the need for a valid estate plan. . .