Creating an estate plan should be a priority for everyone, regardless of age or financial situation. These plans can help protect your family, property and assets in the event of incapacity or death. The four core documents in any estate plan are a will, power of attorney, living will and trust. Each document has its own purpose and is essential for ensuring your wishes are carried out as you intend. Understanding these documents is critical to creating an effective estate plan that meets your needs.
Wills
A Will is a straightforward legal document. It allows you to specify who will get your assets after your death, when they are received, and who will administer your Estate (the “Executor”). Other clauses may appoint a Guardian to care for your minor children and make the probate procedure easier by directing that the Estate be administered independently. A will is best developed by a wills attorney.
Power of Attorney for Property
A Power of Attorney for Property allows you to choose an agent to handle your financial affairs if you cannot do so or prefer to delegate certain financial activities to someone else. Many people feel their spouse will be able to handle matters, but unless the partner is named to act in the asset papers, the spouse will usually lack the legal capacity to act.
Healthcare Power of Attorney
A Healthcare Power of Attorney allows you to choose someone to make medical decisions on your behalf if you cannot. It also allows you to express your wishes for organ donation, burial/cremation, and the extent to which you want medical treatments if you are terminally ill.
Revocable “Living” Trust
A living trust is a good option if a person owns real Estate or other vital assets. It is possible to modify one’s trust at any time. The trust document functions similarly to a Will by identifying who will be the trustee if the grantor is unable to act (due to death or disability). It will also define who will receive the assets and when they will be received. A living trust should be “financed” by designating the trust as the owner or beneficiary of assets.
In conclusion,
Estate planning is an important part of protecting your assets and ensuring that your wishes are honored. Taking the time to create the four core estate planning documents will ensure that your loved ones are provided for in the event of an emergency or disability, and that your possessions are handled according to your wishes. If you haven’t yet created these documents, it is never too late to get started.