There are six important components to an estate plan, THE WILL. The first known component of an estate plan is a will. A will may not be the only document you need, but it is still an essential part of any estate plan. You warrant that the probate court will not distribute your property in accordance with the laws of intestate succession, but rather as you designate how and to whom you want your property to be distributed.
In addition, you can designate the person you want to serve as the personal representative of your estate to manage your affairs after death. It is important to note that a will also allows you to name a legal guardian for your children in case something happens to you and the other parent. Unlike a will, you don't write a power of attorney to use after your death, but in case something happens to you that makes you mentally unable to handle your own affairs. You can give a trusted person the authority to take charge of your financial and legal affairs if you become incapacitated.
This is quite preferable to having a court name as a guardian for you, and it helps ensure that there is as little disruption as possible in your affairs. If you become incapacitated, a health care directive, which is similar to a power of attorney, may designate a health care proxy to make health care decisions for you. Another document, called a living will, sets out your wishes for health care, and especially end-of-life care. Your health care agent must be familiar with your living will and must be someone you can trust to fulfill your wishes.
These documents help to eliminate conflict if family members do not agree with the nature of their care. Retirement plans, such as 401 (k) workplace plans and individual retirement accounts. This isn't really a component of your estate plan, but it does play an important role if you have them set up with other accounts, such as your life insurance, an IRA, or your 401 (k) plan. Here are the main components of an estate plan that you should consider, even in your comprehensive plan.
Specific details related to trusts and wills also differ slightly from state to state, so be sure to talk to an estate planner to determine which option best suits your situation (and update it in case you ever move to a new state). A good estate plan consists of many different components, including what happens to your assets and who should act on your behalf if you are unable to do so. If your estate is small and your wishes are simple, an online or bundled will writing program may be sufficient for your needs. So, clarify your state's guidelines and check with your estate planner about how often you should review your document.
It doesn't matter if you're rich, poor, young, old, or anything else, having a well-developed plan for what happens to your assets can give you peace of mind that your loved ones will be financially secure no matter what happens to you. Once you have an idea of what is in your estate, think about how to protect assets and your family after you die. However, estate planning can be done regardless of your financial status, as it includes important information such as the name of the guardians of your minor children and the guarantee that their assets go to the designated beneficiaries. Careful planning for potentially devastating long-term care costs can help protect your estate, whether it's for your spouse or your children.
While others may leave it in the hands of the retirement plan holder's estate, this could have negative tax consequences. Although it is not necessarily part of your estate plan, at the same time you create an estate plan, you must ensure that your retirement plan beneficiary designations are up to date. An estate plan is vital to help you use your assets to support loved ones in the event of death or disability. If you have doubts about the process, it might be worthwhile to consult a probate lawyer and possibly a tax advisor.
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