There is a common perception that estate planning only includes a will or a trust in someone’s or some organization’s name. But it is not true at all. There are many features associated with an estate plan. You can do a lot in your estate planning.
Also, remember that estate planning is not only about wealthy people. Estate planning means giving your belonging to another person after your death. This belonging can be anything, and it does not have to be a costly house or a car. So, keeping in mind that estate planning is for all of us, this article gives you a brief idea of the elements that an estate plan includes.
What Is Estate Planning?
Estate planning is distributing all your belongings to any person or any organization through legal documentation. People mainly do this to protect their beneficiaries and their assets.
Must-Have Contents in Estate Planning!
Here are some of the must-have things in any estate planning:
Wills or Trusts
A will or a trust is a must in estate planning. Even if you do not have any substantial assets, you must have a valid will or a trust where you have distributed your belongings as per your wishes. Sometimes having a confidence puts a limit on the estate taxes.
Now, proper documentation is essential for a will or a trust. You need to be very careful while distributing your assets to your loved ones. Any small mistake can lead to confusion, resulting in legal contests among your relatives. And this scenario could end up being very messy.
Having A Durable Power of Attorney
Making someone else a power of attorney is very important while still alive. For example, if you are mentally incompetent, the court might take your assets and give them to people you did not want to. So, to avoid such situations, you need to have someone else who can make decisions on your behalf.
Most people let their better half take the position of power of attorney just for convenience. But you can choose anyone in the family who you trust the most.
Your insurance plans and savings account can be passed outside of your will. So, it would help if you chose the proper beneficiaries for these accounts. But, on the other hand, if you do not happen to have any beneficiaries, the court tends to take such cases after your death. And the decision of the court might not be the same as yours. So, it is always better to have beneficiaries registered as soon as possible.
Remember that the beneficiary must be more than 18 years old, and they should be mentally competent.
Letter of Intent
A letter of intent is a letter that you can leave to your beneficiaries stating what you want them to do with your possessions and belongings. This kind of document is not valid in front of the court, but definitely, it holds a lot of value to the beneficiary. This letter helps in the distribution of your assets and also portrays your intentions to everyone in the family.
The healthcare Proxy gives another person the power to make healthcare decisions for you. You must be sure that the person with the healthcare power of attorney can be trusted entirely and that they would make the best decisions for your health on your behalf.
SOME IMPORTANT POINTS!
- Estate planning does not cater to rich people only. It is for everyone!
- You need to have proper documentation while planning your estate, or else the probate court can potentially leave all your belongings to some unintended person.
- The estate planning will allow the family member or your attorney to carry out your wishes just in case you become incapacitated while you are alive.
Having estate planning is a necessary step so that all our loved ones can be protected after we are gone. This also ensures the well-being of our hard-earned heritage as well. We hope this article has given you a good idea of estate planning and what it constitutes.