Everyone should have a plan in place for their estate, but your particular situation will determine exactly which components are needed to ensure that your estate will be handled in accordance with your wishes. The estate planning process can seem daunting and possibly confusing. There is a lot to consider, and the decisions involved in estate planning are important.
What is Estate Planning?
The process of estate planning involves establishing who will receive your assets in the event of your death or incapacitation.
Often designed with guidance from an attorney, an estate plan ensures heirs and beneficiaries receive assets in a way that manages and minimizes estate taxes, gift taxes, and other tax impacts.
4 Components of Estate Planning
Here are the four fundamental components of a successful estate plan.
#1 Will
Whether you are affluent or have limited means, a will or trust is an essential component of any estate strategy.
A will is a legally enforceable declaration that specifies who will inherit your possessions after your passing. If you have a will or a trust in place, your estate, which is all of your goods and assets, will be dispersed in accordance with your wishes after your passing.
Any children you have who are under the age of 18 at the time of your passing can also have a guardian named in your will.
#2 Trust
In a trust, one individual, or an organization, such as a bank or law firm, is known as the “trustee.” The trustee maintains legal title to property for another person, known as the “beneficiary.”
You can designate portions of your estate to go toward certain things while you’re still alive using a revocable living trust. Your chosen successor trustee will be able to take over if you become ill or incapacitated.
Another option is to create an irrevocable trust, which the creator cannot alter or revoke.
There are many possible justifications for creating a trust, but perhaps one of the most important is to avoid probate. If you create a revocable living trust, any assets in the trust may pass to your beneficiaries immediately upon your death saving time and money by avoiding the probate process which would otherwise be used to disperse your assets.
#3 Power of Attorney
A durable power of attorney enables you to designate a dependable person to manage your financial and legal affairs in the event that you become temporarily or permanently unable to do so. If you ever lose the ability to make financial decisions for yourself, it is the responsibility of this person to act on your behalf.
The selected power of attorney will be responsible for organizing your financial matters for you and would intervene as necessary. Without a durable power of attorney in place, the court will have to act on your behalf to appoint someone to represent you.
#4 Medical Directive
A living will, durable power of attorney for healthcare, health care proxy, and medical directions are just a few examples of legal documents that might be included in a medical directive. The specific legal documents included will be chosen based on your selections and the rules of your jurisdiction.
In the event that you are unable to make medical choices for yourself, a durable power of attorney for health care decisions, sometimes referred to as a health care proxy, appoints a person to act on your behalf.
We Can Help Secure Your Estate Plan
By putting all these components in place, you can secure your estate and continue to support your family after you pass away. If you need assistance with estate planning or have questions about any potential legal matter, please contact Apfelbaum Law for a consultation.
