Do You Have a Proper Estate Plan in Place?

last will and testamentMany people think, “I don’t need a will, I have nothing to leave to anyone!”

The truth is, everyone needs to have an estate plan in place so that surviving family members are clear about your intentions. There are multiple parts to an estate plan, and it’s not as complicated as it might sound.  First of all, the word ‘estate’ simply means ‘all of your assets’.

Now, in order to be fully prepared, you will want to address the following components of an estate plan: a will, the assignment of someone as your power of attorney, a living will (or a medical power of attorney.) Depending on your situation, you may want to consider a trust as well.

1. The will tells precisely how you want anything and everything you own to be distributed after your demise. If you pass away before you get a chance to make a will, your children and other family members will have no idea who gets what, which can spark long-lasting family arguments.

2. Power of Attorney means that you are choosing someone to handle your financial affairs if and when you become incapable of doing so yourself, while you are still living but have experienced a medical crisis that has left you unable to make wise decisions. This person will be able to sign your name on financial documents and is required to act only in your best interests at all times. If you pass away without having assigned a person as your Power of Attorney, the court system will have to assign you a guardian, which can cost your family members even more money.

  • Springing Power of Attorney only goes into effect under certain circumstances that you set out in your
    Estate Plan.
  • Durable Power of Attorney becomes effective as soon as you are deemed incapacitated by a medical professional.

3. A Living Will is also known as an Advance Medical Directive, and it is exactly what it sounds like. This is the document wherein you will make your wishes known regarding your medical care and living-saving interventions that you wish to have taken if you become incapacitated and unable to communicate these wishes yourself.

4. A trust can be beneficial for you and your family if you have a net worth of $100,000 or more, a large amount of assets in real estate, a business, or a pricey collection. You may also want to set up a trust if you want to make certain conditions for your heirs as to when they will receive their inheritance, usually in multiple parts or upon meeting certain conditions. If you have a spouse and other heirs that you need and want to support, like children from a first marriage, a trust will ensure that the remainder of your estate will go to those children after your spouse passes away. A trust can also be effective if you have a relative who is disabled. To leave all of your money to him may disqualify him for government assistance, but setting up a trust avoids that.

It is always recommended that you have a talk with your children or other heirs before you pass away so your intentions for your estate plan are very clear. Also, there are easy ways to give monetary gifts to your heirs tax-free. To learn more about all of the details involved in the estate planning process, find a qualified attorney and make an appointment today.  Having a plan in place will give you the peace of mind that you might not have even realized you were missing.

Image credit: Ken Mayer

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7 Responses to Do You Have a Proper Estate Plan in Place?

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