Estate planning is a vital step that most adults need to take. Unfortunately, many overlook it. They think they have plenty of time to complete one in the future, or that their estate is not large enough to need one. It is important to note that failing to prepare a proper estate plan can cost your heirs a lot of money and hardship. In honor of estate planning awareness week, we put together a list of the four most vital documents for a complete estate plan.
1. Living Trust
Many have the misconception that living trusts are only for the rich. Others think that a last will and testament is all they need. While a will is a good document to have, it does not make up a complete estate plan. A trust will provide you with several benefits that a will cannot. First, a trust will allow you to avoid probate. This means your beneficiaries will not have to go through the expense and red tape of probating an estate. Second, a trust will give you a lot of control over your assets. For example, you can choose to give your beneficiaries their inheritance outright, with an age-specific delay, or through a secondary trust that will prevent them from squandering the money. Lastly, trusts provide privacy. Since no documentation is put on file with the court, your trust is kept out of public record.
2. Pour-Over Will
Even if you have a living trust set up, it is important to have a pour-over will. This will act as a failsafe in case there were assets that you forgot to title into your trust. A pour-over will name your trust as the sole beneficiary. That way if you have any probatable assets, they will “pour over” into the trust. This will distribute your leftover assets according to the trust provisions instead of the laws of probate.
3. Financial Power of Attorney
A financial power of attorney will give you the ability to appoint someone to take care of your financial needs if your health deteriorates. This is a protection for you because it allows your agent to care for your financial needs when you are unable. This document gives your agent the ability to pay your bills and attend to other important financial matters on your behalf.
4. Health Care Power of Attorney
A health care power of attorney is another important document to have in place. It allows you to outline the health care choices you want. Also, you can appoint an agent to make healthcare decisions for you when you are unable to do so yourself. It is important to note that your agent is not given complete control, the decisions they make must be made in accordance with the instructions you outline.
Raise Your Estate Planning Awareness
Starting down the path to complete your estate plan may seem overwhelming. But estate planning awareness week is the perfect time to get the process started. With the proper help to guide you through the process, you will be able to rest assured, knowing that all your affairs are in order.
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