Estate Planning Essentials: The Importance of Planning Early
Estate Planning Essentials
It can be difficult for individuals to think about their own incapacity or death. But spending a few moments doing what you need to do to prepare for it, can make life much easier for your loved ones. Many families turn to estate planning to ensure their loved ones are cared for. There are many different types of estate planning tools. The information in here will provide you with the basic outline of estate planning essentials.
Individual Estate Plan (for individuals)
The first and most common estate plans is an individual estate plan. This plan covers the basic essentials for all individuals. Typically this plan will include a Last Will and Testament, Healthcare Directives, Living Will, Durable Power of Attorney for Financial, Durable Power of Attorney for Healthcare, Beneficiary Deed and any other requested planning.
The Family Estate Plan (for children)
Another common estate plan is the family plan that works for parents with minor children. The family estate planning package usually covers all of the needs of parents with kids. Each parent will generally have a Will with a Minor Testamentary Trust, Living Will, Healthcare Directives, Durable Power of Attorney for Financial, Durable Power of Attorney for Healthcare, Beneficiary Deed and any other requested planning.
The Trust Plan (for couples)
Many couples choose a trust-based plan to try to avoid probate. These plans preserve the assets in the trust. The trust-based plan usually consists of a Revocable Living Trust, Pour-Over Will, Durable Power of Attorney for Financial, Durable Power of Attorney for Healthcare, Healthcare Directives, Deeds, and any other trust matters.
Now that you know the most common estate plans, let’s dive a bit deeper into what some of these documents are.
Last Will and Testament
Many people have the misconception that a written will means your family can avoid probate in the event of your passing. While this is not true, there are many reasons to have a will. A will can designate who you want to take care of your children or pets in the event of your passing. Wills also distribute your estate upon your death. When a will has not been proven to the probate court, the law dictates who gets the estate. Instead of courts relying on the laws of intestacy to determine the distribution of you estate, which may not coincide with the passing individual’s wishes, the individual can decide these matters simply by creating a last will and testament.
Power of Attorney
Although it is difficult to think about, there may come a time when you are unable to talk to a doctor about your options or a time when you are no longer able to manage your finances. A power of attorney is legal documentation giving someone power to act in your place. A durable power of attorney means the document stays in effect upon your incapacity. Granting an individual durable power of attorney allows the named person to care for your legal, financial and medical affairs when you are no longer able to take care of them yourself. Examples of what the power of attorney can do would be paying your bills, managing accounts and directing medical care.
Revocable Living Trust
A trust can determine how a person’s property and assets are managed and distributed during that person’s life and death. Three parties are normally involved in a trust: 1. The settlor who creates the trust, and usually funding the trust. 2. The trustee who holds title to the trust and manages the trust according to the terms of the trust. 3. The beneficiary who is the person or entity who receives the income or principal from the trust. A revocable living trust IS NOT an adequate substitute for a will. A will accompanies a revocable living trust and the will is called a “pour over” will. This will names the revocable living trust as the principal beneficiary. This means any property not in the trust is added to the trust upon the settlor’s death and distributed to the beneficiary according to the trust instructions. Property held in a revocable living trust at the time of the settlor’s death in NOT subject to probate administration.
Again, it is hard to think about what happens when you are no longer here. Having these documents can be incredibly helpful to you and your family. Contact an attorney to have them assist you in drafting these necessary documents.