Before creating an estate plan, it is important that you are aware of the various estate planning forms and tools. Below we have highlighted some of these tools and forms.
What is Estate Planning?
Estate planning is the act of preparing for the transfer of an individual’s asset and wealth to designated beneficiaries after his or her death. Assets, pensions, real estate, life insurance, cars, personal belongings, including debts are among one’s estate. An estate plan must be written, signed, and notarized by the estate owner.
After your death, your will, a significant component of your estate plan, will dictate how your assets is to be managed and shared. If you die without a will, it is said that you died intestate. In that case, your state will step in.
The Significance of Estate Planning
Several individuals believe that having an estate plan is all about creating a will or a trust. But, there is more to include in your estate planning to ensure that all your assets are well managed and distributed effortlessly to your heirs after your demise.
A successful estate plan also comes with provisions allowing your loved ones to access or manage your assets should you become incapacitated.
Let’s consider the common estate planning forms and tools:
Estate Planning forms and Tools
WILL
An estate plan without a will cannot be called an estate plan, as a will is the first document you’ll think of when preparing your estate plan. A will is basically a document that contains information regarding how you want your assets to be distributed and managed. It also contains the names of your estate beneficiaries, including the portion of your assets you want each individual to inherit.
If you have minor children, you can as well designate guardians for them in your will in case you and your spouse become incapacitated.
Trusts
Another component of a well-developed plan is a trust. Trusts are legal setups that hold assets on behalf of a beneficiary or beneficiaries. There are several types of trusts, and the individual setting up a trust can determine how and when beneficiaries receive the assets present in the trust. With a revocable trust- a trust where its terms can be altered or modified without the consent of the beneficiaries- you can escape the expensive and time-consuming probate process. Irrevocable trust, on the other hand, can help restrict exposure to estate taxes.
Power of attorney
A power of attorney is an important component of an estate plan, and it will come in handy when you become incapacitated. It is a legal document that allows you to designate an individual who will make important financial and legal decisions on your behalf. Without a power of attorney, the court in your state will step in and select an individual who will be charged with making those important financial and legal decisions on your behalf.
Healthcare directives
Healthcare directives are almost similar to a power of attorney. The main difference between power of attorney and a healthcare directives is that, while the former handle your financial and legal decisions, the latter handles your medical decisions. There are two main documents in this category; a living will and a healthcare proxy.
A living will
A living will is a legal document that state how you wish to be cater to in the event of your incapacitation. A healthcare proxy, on the other hand, allows you to choose an individual who will make those important healthcare decisions on your behalf.
If you feel that your family member may have different opinion regarding how you want to be catered to when incapacitated, it is best you have these documents in place to make sure that you wishes are adhered to.
Need an estate planning attorney?
If you want to plan your estate, and you need the services of an experienced estate planning attorney, please, don’t hesitate to contact us. Also, if you need help with updating your estate plan, you can contact our office as well. We boast of competent estate planning attorney who can help in creating an estate plan that suits your needs
