The Importance of a Properly Executed Estate Plan
Updated: Feb 25, 2019
Estate planning is the process of designating the distribution of your assets in the event of death. It also specifies how your affairs will be conducted if you are unable to make those decisions. Estate planning is sometimes perceived to be only for the wealthy, but net worth is not important and everyone of legal age should have an estate plan. It can be as simple as writing a will, establishing a trust or both.A trust will keep your estate out of probate.The majority of adults are not prepared with regard to these matters, so you are not alone. Most people do not take action because they simply do not understand the necessity of doing so. Many people do not create an estate plan because answering the questions associated with estate planning can bring forward worrisome thoughts. Even though estate planning can be 'scary,' the implications of not having an estate plan can be devastating for your family.
Probate is the formal legal process that gives recognition to the will and appoints the executor who will administer the assets to beneficiaries. Laws from state to state vary so it is important to consult with an attorney to determine whether a probate proceeding is necessary.
Whether large or small, most Americans have an estate. The estate can be a compilation of your home, jewelry, bank accounts, stocks and/or life insurance. If you die without a will, most states will step in and determine how your estate is handled. Wills are important to establish your wishes legally, however they will not keep your estate out of probate. Nobody thinks of dying young but if you are a parent of young children you need to prepare for the unthinkable. In order to ensure your children are taken care of in a manner you approve of you will want to name their guardians if under age 18. Without such a will, the courts will step in. A will is the last gift you’ll leave your loved ones.
The revocable living trust is most often used for estate planning. The assets named in the trust go directly to the named beneficiaries without going to probate. A will goes into effect after you die however a trust takes effect as soon as you create it. It is a legal arrangement through which one person “the trustee” holds legal title to a property for another person called “a beneficiary.” Most commonly, the heirs will not have to pay estate taxes on the inherited property. Your attorney can best tell you how to use a will and a trust in your estate plan.
Power of Attorney
This is a legal document that gives someone the power to act in your place in the event you cannot. The trusted person you name legally will be permitted to take care of important matters such as paying your bills and managing your investments. Your power of attorney is “durable” unless otherwise stated. Durable indicates that the powers will still be effective if the principal becomes mentally incapacitated.
Healthcare Power of Attorney
This is a legal healthcare directive that explains your wishes for healthcare if you are too ill or injured to speak for yourself. Advance directives are important tools for anyone to have because even the healthiest person could experience a sudden accident or not be able to speak for themselves. While the power of attorney names the trusted agent who will act on your behalf, the living will spells out your medical wishes with regard to life-sustaining treatments.
In conclusion, if you want your loved ones and assets then an estate plan is a crucial part of that process.. Without a properly executed plan, your heirs could face tax burdens and the courts will designate how assets are divided as well as who gets your children.
Contributed by Boatwright Law Firm