Estate Planning: Three Essentials
No one likes to think about the time when they will no longer be around, but it's essential to start thinking about estate planning once you reach a certain age. Proper estate planning ensures that your assets will be distributed in accordance with your wishes after you pass away and that your desires regarding your end of life decisions will be respected. Here are three things you must do in order to create a solid estate plan.
Wills and Living Trusts
It's crucial that you set up a will or living trust, or perhaps both. If you do not do this, then your assets will be distributed according to state law. The law, however, may not distribute your assets to the individuals you would prefer. Having a will or living trust precludes this possibility.
For many individuals, simply having a will is going be sufficient. If you have a large estate, however, creating a living trust has the advantage of avoiding probate entirely. The disadvantage of a living trust is that they are considerably more expensive to set up than a simple will. But if you have considerable assets, the extra cost is often worth it.
Another key consideration when forming an estate plan is deciding how you would deal with health issues. Your health will almost inevitably decline with age and in some instances you may become incapacitated and unable to make your own decisions.
To deal with this issue, it's a good idea to create a health care power of attorney. This document will let you designate someone to act on your behalf if you are unable to make vital health care decisions for yourself. This typically includes decisions such as whether to continue with life support measures. An alternative is to create a living will, although this legal instrument is somewhat more limited health care power of attorney.
In addition to having someone make your health decisions if you become incapacitated, you will need someone to make your financial decisions. That's why you should set up a durable financial power of attorney. This document allows you to designate someone to make your important financial decisions if you are unable to.
These decisions includes things such as paying your bills and taxes, as well as taking care of your medical bills. Managing your various assets and investing your money is also part of their job. An important point to keep in mind is that this financial representative only has power over your finances while you remain living. After your death, they have no authority over your finances or the distribution of your assets.
It's virtually impossible for a layman to create a strong estate plan without expert advice. Contact law offices like Skeen Law Offices to learn more.