Estate planning is the process of setting up the distribution of a person’s assets. It involves all the documents that rule a person’s assets, including, but not limited to, trusts and wills. Estate plans also lay out the management, distribution, and protection of such assets. In other words, when a person passes away, the estate plan ensures that a person’s wishes are implemented.
Who Needs Estate Planning?
The future is unknown for everyone. While a person may be living one minute, there’s no guarantee that he or she will be living the next minute. This is why it’s so important to plan for the future and to protect your loved ones financially, making sure your assets go to the right hands, per your wishes. Sadly, most people do not think of death as a possibility in the near future and thus do not plan ahead.
Others might not even be aware of their assets and do not see the need to get an estate plan. Almost all people have some kind of estate: a house, a business, a life insurance policy, an employee benefits package, etc. Estate plans are not only for asset distribution but also for stating what would happen if you become disabled.
Benefits of an Estate Plan
Estate plans are hugely important and everyone should have one. As stated above, an estate plan will clearly state how your assets will be managed in the event of your death, as well as what type of healthcare you’ll want should you become incapacitated. In an estate plan, you can be as specific as you want to be about whom you’d like to care for you and who will be the beneficiaries of the wealth you leave behind.
Distribution of Property Using a Will
A will is a document that lays out your property distribution plan upon your death. It also includes the transfer of such properties from your name to the name of the person or institution of your choice. A will comes into effect only upon someone’s death. As soon as someone with a will passes away, the will is admitted to the probate court system. There’s also what’s called a living will, which is a will that contains instructions about your healthcare wishes in the event of becoming disabled.
Durable Power of Attorney for Healthcare and Property
This document assigns the person of your choice to decide your healthcare treatment in the event that you are unable to approve the care yourself. Another form of durable power of attorney is the Durable Power of Attorney for Property, in which the person you have appointed gets to make financial decisions for you in the event of permanent disability.
Living Trusts
Unlike a living will, a living trust is revocable, which means the person with the living trust remains in control of his wealth. Living trusts are used to assign a trustee to follow the instructions within the trust, but the person with the living trust can change the document at any time.
It’s never too late to start your estate planning. Contact a qualified estate planning attorney to set up your estate plan and protect your assets immediately.
