Many people overlook the power of estate planning. They think that it only involves writing a will or trust to protect their family in case of death. Estate planning includes much more than just a will.
Estate planning documents allow your family members to control your assets in case you die or become incapacitated. It enables you to leave your properties in order in case of death, leaving your heir without any disputes. It gives your family members and attorney permission to carry out your wishes if you’re still alive and incapacitated.
Here is the estate planning documents checklist that every estate plan must have.
A Will Helps to Distribute Assets
Think of what can happen to your assets when you die without providing the right ownership. Your state will come in with intestacy laws to distribute your belongings. A will can help you state the right ownership of your belongings in case you die.
By creating a will, you’re able to control who gets what since you have the freedom to leave your assets to anybody you’re comfortable with. Creating your own will allows you to choose an executor. An executor ensures that the terms of your will are carried out as you wish.
It’s important to create a will when you’re still alive, especially if you have kids below 18 years. In the will, you can designate a guardian who will take care of your kids if you die before they become adults. Also, remember that a will doesn’t control the distribution of your assets.
Estate Planning Documents Checklist Should Contain Trust
A living trust is very important when it comes to saving money for your living heirs. You can create trust during your lifetime and ensure the trust owns and manages your assets while you’re still alive. But after you die, the person you choose to manage your trust should be able to distribute the assets to your chosen beneficiaries.
Your living trust should be a private entity and doesn’t need to go through probate court. You can save the cost of going through probate proceedings by leaving your assets to distribute independently. There’s also a revocable trust in which you can make changes during your lifetime.
With a living trust, you can use your assets while alive without worrying about the federal government’s repercussions. You don’t need to worry about tax exemption in case you avoid estate taxes. Unlike a will, you can use the trust to distribute your belongings now or even after your death.
Durable Power of Attorney
Think of the power of attorney when you cannot make decisions on your own regarding your assets. A durable power of attorney will help you choose someone who can act on your behalf if you become incapacitated. However, for you to choose someone you trust, you must be legally competent.
Don’t be that person who fears relinquishing control over your assets until you’re no longer legally competent to choose the right attorney. Without a durable power of attorney, you can leave your assets in the hands of the court. They’ll decide what happens to your assets if you become mentally incompetent.
Power of attorney gives your agent the power to transact your properties. These range from real estate, financial transactions, and making legal decisions on your behalf.
This type of estate planning documents is revocable when you become physically and mentally able or die. But the revocation lies with the principle at the time of choosing.
You can also save the cost of hiring a durable power of attorney by assigning your family member, a friend, or a trusted advisor. This person should be financially stable to act as your agent. A durable attorney is also capable of taking you through the importance of estate planning and educating you more about it.
You can pass all your possessions to your heirs without dictating them in a will. This is why you’ll need a beneficiary at some point. Remember that some assets cannot be distributed using a will, prompting a beneficiary to come in.
Such assets that don’t go through a will include life insurance proceeds, assets held in a joint title, and property held in a living trust. How do you ensure these assets are distributed as you want when you die?
Your insurance plans should contain both beneficiary and contingent beneficiary. Failure to name a beneficiary can leave you with no choice but to leave your assets for the court to decide on the fate of your funds.
A judge who has no idea of your situation and beliefs can make decisions contrary to your wishes. Ensure you name a beneficiary who is 21 years of age and is mentally competent. If they’re not competent, they may end up getting court attention to solve the matter.
Healthcare Power of Attorney
Making a medical decision when you’re sick is very challenging. You should have someone to make medical decisions on your behalf in case you become sick. Durable health care power of attorney isn’t the same as the durable power of attorney.
With the help of healthcare power of attorney, you can designate your family member to make important decisions on your health if you become incapacitated. To come up with this document, you need to choose someone you trust. It should be someone you can share your views, and recommend a course of action that you can agree with.
You should also identify a backup agent if your initial pick fails to show up at the time of need. Make sure you choose someone you trust because that person will have your life on their hands.
Your children should be your top priority when creating a will. Although most families overlook guardianship designations, it’s important to pick a guardian for your kids. Ensure you pick an individual who shares your views, a financially savvy, and willing to raise your kids when you’re not there.
You should also look for a contingent guardian to act as a backup if the chosen guardian becomes unavailable. If you don’t designate a guardian for your kids, a court could rule that your kids should live with someone you wouldn’t have selected. This can make your children become wards of the state.
Estate Planning Is More Important Than you Imagined
This estate planning documents checklist helps you decide how to distribute your assets. Estate planning ensures that your family members and other beneficiaries are provided for. They should access your assets if you become incapacitated or die.
With this estate planning checklist, you can prepare yourself and your family without worrying about what the future might holds. If you need more help regarding estate planning or choosing the right attorney, we have your back. Check out other articles on this site for more information.