There are three keys that everyone needs for a complete estate plan. These three things are not just for the wealthy, they are for everyone. If you want to have a complete estate plan, make sure that you have at least the following three things in place.
1. Up-to-Date Trust
It is a common misconception that a Will is all that you need for a complete estate plan. They may be cheaper and easier to create, however, they leave behind much more work for beneficiaries. This is because your estate will have to go through the lengthy and expensive probate process.
Though a trust may cost a little more initially, it will save you and your beneficiaries time and money in the long run. If set up correctly, a Trust will help you to completely avoid probate. This will allow your assets to pass directly to your beneficiaries without any involvement from the court. If you desire a trust can also be set up so that you can reduce estate taxes and protect the money you are giving to your beneficiaries from creditors. Before you get started you may want to explore the 5 Important Differences Between a Will and Living Trust!
2. Durable Power of Attorney
You will want to have a durable power of attorney in place. This document will allow you to name a trusted person to make financial and legal decisions for you if you are unable to do so. You may also want to create medical powers of attorney. This document will allow you to name a trusted person to make medical decisions for you. However, the decisions they make have to be made under guidelines that you specified. This will allow them to instruct medical professionals on what type of care you desire if you are unable to express these desires yourself.
3. Updated Beneficiary Designation Forms
An important aspect of estate planning that people tend to overlook is keeping their beneficiary designation forms up to date. These forms are found on insurance policies, 401(k) plans, and other retirement accounts. It is important to check these designations periodically.
Your choices may change due to death, divorce, or birth. By updating and checking these documents regularly you ensure that your money from these accounts will go to whom you desire.
If you do not have a complete estate plan be sure that you meet with a qualified professional who can help you implement and correct any of the essential documents that you need. Do not leave yourself open to an estate planning failure by being unprepared.