Estate planning is an important part of ensuring that your assets are smoothly transferred to your heirs upon your death. It's essential to draft a set of documents that will help you and your family in the event of disability or death. The five most important documents to include in your estate plan are your will, a trust, powers of attorney, advance medical instructions, and beneficiary designations. Many people believe that having an estate plan simply means drafting a will or trust.
However, there is much more to include in your estate planning to ensure that all your possessions are taken care of. There are specific estate planning documents, such as the health care power of attorney and the will or trust. It's essential to draft a durable power of attorney (POA) for an agent or person you assign to act on your behalf when you can't do it yourself. In the absence of a power of attorney, the court may decide what happens to your assets if it is determined that you are mentally incompetent, and the court's decision may not be what you expected.
As noted above, several of your possessions can pass to your heirs without being dictated by the will (e.g., life insurance policies, IRAs, 401(k)s). That's why it's important to keep a beneficiary and a contingent beneficiary in that account. Insurance plans must also include a beneficiary and a contingent beneficiary, as they can also pass outside of a will. Designated beneficiaries must be 21 years of age or older and mentally competent.
If they are not, a court may end up getting involved in the matter. A letter of intent is simply a document left to your executor or beneficiary. The purpose is to define what you want to do with a particular asset after your death or disability. Some letters of intent also provide details of the funeral or other special requests. A Health Care Power of Attorney (HCPA) designates another person (usually a spouse or family member) to make important health care decisions on your behalf in the event of disability. An estate plan is a collection of documents and includes a will, guardianship designations, power of attorney for health care, designations of beneficiaries, a durable power of attorney, and a personal letter of intent that describes your wishes in the event that you die or become incapacitated. The designation of a beneficiary determines who will receive life insurance policies, IRAs, 401(k)s, and other types of financial accounts when you die.
Once assigned, your executor or executor, upon your death, ensures that your beneficiaries receive the assets according to their designations. The beneficiaries may be different from those named in your last will and testament. You can also have multiple beneficiaries in your estate plan. So let's start with the most outstanding document: your last will and testament. This document establishes who receives your assets after death.
It also assigns the person who administers the will (an executor or executor), its beneficiaries, and the guardians of their minor children, if any. At that point, you should take the time to determine your executor or executor as they will handle everything related to your estate. A durable power of attorney (POA), also known as a financial power of attorney, assigns a person the task of managing your finances in case you become incapacitated or suffer from memory loss. In addition to finance, a POA appoints someone to handle your legal and business matters. While the primary consideration of any estate plan focuses on finances and assets, a good estate planning document addresses medical or health care decisions. A medical power of attorney document determines who makes health care decisions on your behalf if you become incapacitated. Like a durable power of attorney, without this estate planning document, your family faces the time and costs of the court to apply for guardianship so that they can make medical decisions on your behalf.
Your estate planning lawyer can ensure that this document is properly executed to meet your wishes. This document, which is usually included in advance instructions, allows you to designate a person (plus an alternate) to make medical decisions on your behalf when you are unable to do so. Now if you just saw the word “trust” and thought “Oh Suze that's only for rich people” you couldn't be more wrong. A revocable living trust is an incredibly powerful document that can be of great help. You keep control of all your finances for as long as you want and you can make changes to your trust as often as you want. These five documents (sometimes four when advance instructions and the power of attorney for health care are combined) help you live a happier less stressful life knowing that you have taken the necessary steps to make tomorrow as easy as possible. These documents are part of his legacy. By making your intentions clear and easing the inheritance process as much as possible you are taking care of your family.
Start with an advance directive here. According to LexisNexis 60% of Americans think everyone should have an estate plan but only 44% actually have an estate planning instrument such as a will trust or durable power of attorney. I suppose that at least half of 44% of those with estate plans have outdated documents that they may have published when their children were born and now 20 30 or 40 years later their family and financial situation has completely changed. These are the 5 essential documents (although depending on how you count them they can be 4 or 6 or more). The most important estate planning instrument for caring for you and your family during life and not after death is the durable power of attorney. This designates one or more people you trust to step in and take care of your finances and legal matters in the event of disability whether due to illness dementia or accident and whether temporary or permanent. In the absence of a durable power of attorney family members often have to go to court to be appointed trustees which causes delays which can be costly and legal fees which are likely to be expensive.
Leave Reply