Estate planning is a necessary process for anyone with assets and wishes they would like detailed for when the time comes that they can no longer make decisions on their own. An estate plan is a set of legal documents that establishes a fan that the family and the identified estate administrator can turn to for instructions on moving forward. As an estate planning lawyer families recommend from Carpenter & Lewis PLLC will share, these documents can play an important role not only after a person passes away but should they become incapacitated and require someone else to step in.
There are several elements of an estate plan, and making such critical decisions about the future can be incredibly overwhelming, which is why many may innocently put off the process. Although it’s easily put off, developing an estate plan and ensuring it is regularly updated offers peace of mind in knowing that there is a plan for when the time comes.
Ensuring That Nothing Is Left Out
Many people commonly believe that an estate plan is the same type of document as a will. However, it’s essential to understand that these are two different things. A will is just one document that can be included in the estate plan. There are several documents, each holding essential factors and serving very specific needs:
- Letter of Intent: This informal document provides information to loved ones and beneficiaries regarding final wishes. The letter of intent could include information pertaining to funeral arrangements, information about bank accounts, log-ins for social media accounts, and can consist of written personal statements to family members.
- Wills: are legal documents that outline how assets should be distributed, identifies an estate administrator, and appoints someone to retain guardianship of minor children. Wills are important because not only do they allocate vital aspects of a person’s estate, but without one, decisions will be left to probate court and will be made following state laws.
- Trusts: are a tool available for those who want to retain privacy, experience tax advantages, and control how assets are distributed. While a trust is not required within an estate plan, it can be beneficial. A trust allows the grantor to transfer assets into a trust account and retain control over them until the time comes for a trustee to take on their fiduciary responsibility. Several types of trusts are available depending on a person’s specific needs.
- Power of Attorney: a document that designates someone to hold control of a person’s affairs. The person with power of attorney can make decisions for someone while still living and after passing. For example, power of attorney allows the appointed party to handle real estate transactions, manage financial affairs, and even make critical medical decisions if a person becomes incapacitated or unavailable for a period.
- Beneficiary Designations: this is the process of identifying benefits that will pass to heirs that do not have to be incorporated into the will. This includes bank accounts, 401ks, life insurance policies, etc. Making these designations are straightforward and can often be done online.
- Healthcare Directives: are similar to medical power of attorney. Not only does a healthcare directive appoint someone to step in to make medical decisions, but it also outlines a person’s wishes for care should they be unable to make these decisions on their own.
Estate planning can be complicated, but by engaging in the planning process, there are many advantages for the person developing the estate plan and their family.