You have spent time building your estate, accumulating assets, investing funds, and making plans for the future. But all of this could easily go to waste if you don't have an estate plan. The plan will ensure your wealth is well distributed when you pass on. Here are some basic elements of estate planning.
This is one of the most important aspects of an estate plan. It doesn't matter whether you're wealthy or not. Having a will in place ensures the distribution of your assets is according to your wishes. Having a will allows you to limit legal challenges and estate taxes.
Additionally, you must be careful with the wording of your will. A will should be consistent in the way you have distributed assets that aren't in the will. For example, if you have named one person as the beneficiary of an insurance policy, you cannot assign the same asset to another person in the will. This would definitely result in a contested will.
Power of Attorney
A power of attorney is the person you appoint as your attorney. Their role is to act on your behalf on financial matters when you're incapacitated or unable to make rational decisions. The attorney is charged with addressing your financial affairs.
Without a power of attorney, the court will handle your financial affairs if you're unable to represent yourself. In such scenarios, the court will appoint a guardian or conservator to attend to your financial issues. This appointee would need the permission of the court to make any financial decisions.
Additionally, the court processes are very time-consuming. The court may not even appoint someone you would prefer to take charge of your financial matters. It's for these reasons you should have a power attorney in your estate plan.
There's a class of assets where you cannot name beneficiaries. Large physical assets like cars and homes may be best catered for through a revocable trust. If you place such assets in a revocable trust, also known as a living trust, you'll avoid probate.
The people named in a trust are called trustees. Revocable trusts give trustees control over the assets in the trust when the trust owner passes on. This way, the ownership of the assets in the trust is transferred smoothly.
Estate planning ensures your assets aren't subjected to probate when you pass on. It also prevents family disputes and makes sure all your assets are distributed according to your wishes. It also permits trusted persons to carry out your wishes in case you are incapacitated. For help with your estate plan, contact a local estate planning attorney.Share