An estate plan is pivotal for everyone, no matter if you are rich or not. You have to take help from a trusted legal help firm to put a good estate plan in place. Check out the different essential components of estate planning from this post.
1. Will
Will is one of the most well-known components of an estate plan. You might like to hire a will estate lawyer to formulate your will. A will makes it clear what will happen to your assets when you are no longer alive. It will determine who will get the responsibility of becoming your personal representative. The personal representative is provided elaborate instructions regarding their responsibilities.
Wills are not just necessary in the case of estate planning for senior citizens. People with young children should also think about making a will. It can be mentioned in a will who will be responsible for taking care of the children. The appointed guardian will be responsible for taking care of the children in case both parents are unable to.
The guardian will provide care to the children and make important decisions for them. The guardian will also be responsible for the financial planning of the minor. Once the children turn 18, the financial assets will automatically be transferred to the children. Therefore, while choosing a guardian for your children, you need to think about someone you can trust blindly.
2. Trust
A trust allows an individual to manage the assets of someone else. You should consult a will trust attorney when planning to set up a trust. You can create various types of trusts according to your needs. However, revocable trusts or living trusts are the most common in the case of middle-class families.
An advantage of a revocable trust is that you can appoint someone to manage your finances in case you become incapacitated. Often, an individual’s spouse is named as the trustee. It is also possible for the trustee to provide for your family members using your assets during the time of your incapacity.
After your death, the trustee will have to provide for your family using the assets placed in the trust. Sometimes trust can be made as a part of the will. The trustee needs to maintain the specific instructions for using your assets. For instance, the trustee can be asked to provide for the educational expenses of your children using the assets within the trust. It might also happen that you ask the trustee to distribute the assets to your children when they reach a particular age.
Sometimes people put titles of assets within a trust to avoid the probate process in court. The probate process can also be made less complicated and less expensive if not completely eliminated. Irrevocable trusts are often set up to shield assets from your creditors or the creditors of your chosen beneficiaries. It is also a legitimate method to reduce estate taxes.
Trust within a will is known as testamentary trust. A will and testament lawyer will remind you that the assets in a testamentary trust cannot get rid of the probate process. Some special needs trusts can also be chosen to set up by an individual. The special needs trusts can be used to benefit disabled relatives without disqualifying them from federal and state medical help.
3. Power Of Attorney
If you provide a power of attorney to someone, it means that they will be able to handle your finances on your behalf. You should consult a legal law service firm before giving a power of attorney to someone. Usually, it is given out to a close family member, such as a spouse or children. If you do not give a power of attorney to someone, the court steps in to choose someone to act on behalf of you.
4. Healthcare Directive
A healthcare directive provides detailed instructions to medical providers. It helps in specifying your wishes regarding medical treatment at a time when you are not in a condition to say it yourself. You can select your spouse, parent, sibling or adult child to speak for yourself when you are incapacitated by an accident or illness.
5. Beneficiary Designations
It occurs on the basis of written decisions concerned with life insurance policies, bank accounts or retirement accounts. It is not too difficult to create beneficiary designations. You only need to submit the correct form to the account administrator. Beneficiary designations have more importance over asset distribution, as mentioned in a will.
Ending Note
An asset protection plan must be made by incorporating the elements mentioned above. You need to remember that the documents need to be reviewed regularly. It is essential for you to determine if the documents comply with the estate law in your state, which might be subject to change.
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