Many people are under a mistaken impression of estate planning. Many believe that their financial situation doesn't merit a plan. However, estate planning is not necessarily all about what you own. Instead, consider an estate plan to be the answer to all those questions your loved ones may have after you pass away. Estate planning includes making important healthcare decisions ahead of time, dealing with burial plans now, and dealing with incapacity along with death.
What You Need in an Estate Plan
Estate plans should be put together with your wishes in mind. It's a time to clear things up for those you leave behind and make it easier for them to cope with their loss. While an estate plan will be unique to your own needs, the below must-haves should be in every estate plan because of their importance.
Last Will and Testament
Everyone should have a will. Probate is the legal way for states to deal with a death and nearly all estates will need to be filed with the probate court. When a will is not available to be probated, the state will substitute its own document known in some places as an estate administration that follows the rules of succession in the state. Wills can be as simple or as detailed as you like.
A trust is very much like a will, but it has the distinction of not having to be probated. You can appoint a trustee that is just like an executor, and you can also have beneficiaries just as you can with a will. However, assets contained within the trust do not have to go through probate – even if they are specifically mentioned in the will. In addition, a trust is entirely private, unlike a will.
This document may be known by various names such as a living will, advance directive, etc. It is meant to leave behind instructions for when you are unable to state your wishes due to illness. You have several choices and decisions to make as to when and how you can be taken off life support, to be resuscitated, tube fed, and more.
Powers of Attorney
You can have several types of powers of attorney that deal with personal and business financial matters.
Life insurance policies, like property in a trust, do not need to be probated either. People of all ages need to plan so that their loved ones are financially secure should they pass away. The younger you are when you take out a policy, the less expensive the premiums tend to be.
Speak to an estate planning lawyer for more info.