An estate plan is a collection of documents and includes a will, guardianship designations, health care power of attorney, beneficiary designations, durable power of attorney, and a letter of personal intent describing your wishes, should you die or become incapacitated. 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. A will is the best-known and most overlooked component of an estate plan. There are so many misconceptions about wills, and the one we hear the most is the feeling of not having enough assets to justify creating a will.
This happens too often, leading people to procrastinate or simply stop doing one altogether. But a will is an important document, since it is the legal record of your wishes and the designation of your assets. With a will, you can choose the people who will receive specific assets. When describing those beneficiaries, make sure they are consistent with other documents outside your will.
Discrepancies can lead to costly mistakes and family tensions, which are best avoided if possible. When you create your will, be sure to include your family and friends in the conversation, especially if you plan to leave them a large asset, for example, the family business or a house. Having conversations beforehand can help you better plan and prepare for the future. With wealth taxes rising, many families are turning to housing part of their estate in a trust to preserve more for their loved ones.
A trust can be a great way to pass money on to the next generation while easing the burden of some wealth taxes. A trust is a legal entity that owns and manages your assets (either while you live or after your death) and is controlled according to the structure you establish. With a trust, you can control how and when your beneficiary will receive your assets. Establishing a trust is a complex process and should be discussed with your estate planning attorney.
A financial power of attorney (POA) is a person you designate to make financial decisions on your behalf in case you become incapacitated or unable to make decisions yourself. Choosing a financial power of attorney is an important decision, and it should be someone who is like-minded who can handle liability tactfully and carefully. When you choose someone, take some time to talk to them about what you want and what you expect from them when it's time to take on that role. Having a candid and open conversation about it will prepare them for the responsibility ahead of them, but it will also give you the opportunity to let them know how you want your assets to be managed.
Just like you'll need someone to preside over your financial and legal affairs, you'll also need someone who can make medical decisions on your behalf, which is where a health care power of attorney comes into play. A health care POA will make medical decisions on your behalf if you are unable to do it yourself. In addition to selecting a health care POA, it is also prudent to create a living will, which is a document that stipulates your medical wishes, including intensive care, life support, and other medical options. Your health care POA should be someone who is like-minded who supports your wishes and carries them out the way you want them to.
Your beneficiaries are crucial to your estate plan, since they are the ones who will inherit your assets, so it is important to choose the people you really want. Be sure to inform your beneficiaries in case of any life-altering circumstances, such as a divorce, remarriage, new child, etc. To keep everything as up to date as possible. The beneficiary designation replaces the one in your will.
Therefore, if your will stipulates that your insurance policy should go to your ex-husband and your will says that you must go to your eldest child, the beneficiary of the insurance policy is the one who will likely stop in court. Make sure your beneficiaries are up to date to reflect their goals and wishes now. If you have children under the age of 18, a guardian's name will be a necessary component of your estate plan. A guardian is someone who will have the legal responsibility to care for your children.
This person will take care of you personally and financially until you are old enough to do it yourself. Guardians will play a key role in your children's development, so you should choose someone who is able to take on this responsibility and do their best. Remember to have a conversation with the person you select so that you are both on the same page and there are no additional surprises in case something happens to you. Estate plans have a lot of moving parts.
While each plan is different, many of them will include the above elements. As always, it's imperative that your financial planner and estate planning lawyer work together to help you create a plan that best reflects your wishes and hopes for the future. We love helping our clients build a strong legacy and one way to do that is with a solid estate plan. Is it time to update your documents or are you starting from scratch? Either way, we'd love to meet you and help you create a plan to establish your legacy.
Schedule a 15-minute call with us, we can't wait to hear from you. The appointment of a power of attorney is key to your estate plan, as it is the person you choose to designate as your de facto proxy. It is important to review your estate plan from time to time (we recommend an annual review) and document any changes you need. An estate plan is vital to help you use your assets to support loved ones in the event of death or disability.
Your will can contain many different components, so to make sure it covers everything you need, you should work with an estate lawyer. When creating an estate plan, you must also ensure that your retirement plan's beneficiary designations are up to date. A will, a common basis of an estate plan, is a legal document that provides instructions for managing your estate assets after death. No matter your age, it's important for each of us to consider obtaining basic estate planning documents.
Here are the main components of an estate plan that you should consider, even in your comprehensive plan. ARAG is not responsible for the legality or accuracy of the information contained therein, nor for the expenses incurred while using this site. Whether you only need one estate planning document or all of them will depend on your specific situation. That's why it's especially important to establish an annual maintenance plan and review each document on a regular basis with your estate planning attorney to make sure everything is always up to date.
An estate plan can also ensure that someone can make financial decisions for you if you are unable to manage your finances because you are injured or ill. There are some plans that can automatically distribute your fund to your children or spouse, while others may leave it in the hands of your estate, which can have tax consequences that you don't want your beneficiaries to bear. . .