21st Apr 2015
Planning ahead for our inevitable death is likely not what we’d like to spend our personal time doing. Nonetheless, we know it’s an important preparation that needs to be taken care of now to insure the smoothest of transitions when we leave this world. Here are the five components of a good estate plan.
A will is the most common thought of piece of an estate plan. A will consists of the plan you have for your most valuable assets. This includes not only your personal property, but more importantly who you would appoint as guardian of your children. A will is certainly a key component in an estate plan, but it’s not all encompassing. Certain assets such as investments fall outside of a will and require other documentation. Having only a will in place requires the document to get a stamp of approval through the courts before your estate can be disbursed, this process is known as probate. This time consuming and exhaustive process can be avoided with a little preparation.
This is where a trust comes into play. Establishing a revocable living trust allows for your property to pass immediately to your designated beneficiaries, avoiding probate. (For example: You establish a trust at your local bank [the “trustee”] and place the title to your property i.e. your home, savings accounts,.. within that trust. You want want your children to obtain these assets when you pass away, and so you name them as the [“beneficiaries”] of the trust). Certain trusts can result in tax benefits for both the donor and the beneficiaries. Trusts, unlike wills, are private documents and only those individuals directly involved need to know about assets and distribution.
Power of Attorney
Just like in establishing a trust, appointing a durable power of attorney avoids an unappealing court process. A power of attorney can act in your place for financial purposes when and if you ever become incapacitated.
Much like the financial aspects of an estate plan, establishing medical directives cut through the yellow tape of court processes and allow you to make your wishes clear. A medical directive may include multiple documents that can allow you to designate who is allowed to make medical decisions on your behalf and instructions to withdraw life support if you’re in a vegetative state.
It’s important to be clear about your beneficiary designations. The beneficiary document attached to your IRA accounts and your life insurance policy overrides what you say elsewhere. The only way to control where the money goes is to name a beneficiary.
These five components are the foundation of a good estate plan. Making it a priority to get your estate in order can save your loved ones a world of trouble. The best way to get started is simply to take the first step. Contact our offices today and schedule a consultation with an Attorney you can trust.