Preparing your finances and assets before incapacity or death is known as estate planning. A prevalent misunderstanding is that estate planning only involves creating the trust or will. However, it should involve much more to ensure that all your assets are smoothly handed to your heirs upon death.
A successful estate plan should also include provisions for family members to access or manage assets if the individuals are unable to do so themselves.
Here, we discuss different types of estate planning.
Wills
A will is a legal document specifying your possessions’ distribution after death. It also permits the appointment of a guardian for minor children. The main advantage of having a will is that it outlines clear instructions on your desires, decreasing potential disputes among survivors. It’s a simple method to ensure that your assets end up in the hands of the people you intended.
Estate Planning Legal Services: Understanding the Last Will or Testament
The second type of estate plan is the last will. This document does nothing until your death. At that time, your family, another chosen representative, files your original Will with the court clerk. That person, often with the assistance of an estate planning legal services lawyer, initiates a legal proceeding known as probate and proceeds with the administration of your estate.
Furthermore, this process is often costly, complex, and time-consuming. The executor of your estate is legally obligated to monitor all assets until they are distributed to the heirs or beneficiaries upon death. The court clerk imposes a fee of $4 for every $1,000 of assets that go through the probate process. Fortunately, your testament only addresses matters that do not have a pay-on-death beneficiary established.
Irrevocable Trust
It is impossible to adjust, amend, or terminate an irrevocable trust after the grantor has transferred the assets to it. However, the grantor can take a second-to-die/survivorship life insurance policy, where the beneficiary receives the payout when all insured parties have passed away. Since the beneficiary only receives the compensation upon the insured’s death, it may encourage criminal activity such as murder.
Health Care Directives
Similar to living wills, health care directives outline your preferences for medical treatment if you cannot communicate them yourself. They can indicate treatment preferences and suggest a healthcare proxy to make choices on your behalf.
Did you know that 56% of Americans believe estate planning is vital, yet only 33% have written down their end-of-life plans? This discrepancy emphasizes the necessity for more awareness and action in estate planning.
Durable Power of Attorney
Drafting a durable power of attorney (POA) is crucial as it allows an assigned agent or person to act on your behalf when you cannot do so yourself. Without a power of attorney, a court may decide on your assets if you are found mentally incompetent, which may not align with your wishes.
This agreement can give your agent the authority to manage real estate, perform financial transactions, and make other legal choices as if they were you. The principal can revoke this type of POA at their discretion, usually when the principal is considered to be physically able, mentally competent, or upon death.
Gun Trusts
Gun owners can set up a gun trust to legally transfer firearms to beneficiaries without passing through probate. These revocable living trusts offer a structured way of owning, utilizing, and distributing firearms.
Proper setup is essential for gun trusts to comply with state and federal rules. Requirements fluctuate depending on the kind of firearms owned. With a well-drafted gun trust, firearms can be passed down per the owner’s specific wishes.
