When it comes to death and disability, your will may not suffice.
- Control the disposition of your assets with a will and a testamentary endowment if you have small children.
- Give others the power to act on your behalf with powers of attorney and guide their decisions with a living will.
- Always consult an attorney to draft and execute legal documents.
Thinking about death can be… uncomfortable. But when it comes to guarantees in life, death is one of the few. However, a properly prepared estate plan can make the future of your money uncertain and is an important part of a personal financial plan. Estate planning requirements vary greatly from person to person, but most Americans can benefit from having these four documents in place. Read on to find out more.
1. Last will and testament
Your last will or testament is the probate document most Americans are familiar with, but what is it and why is it important? As a rule, your will regulates the disposal of your assets. A will allows for certain legacies, such as B. a gift of sentimental value. It also forwards the “rest” or “remainder of the estate” to specific beneficiaries. For example, a will could give one child a business interest while giving another a portion of the testator’s 401(k).
One of the reasons a will is so important is that it helps an estate avoid probate courts. An estate is the division of a deceased person’s property where there is no will. In this case, the government gets involved and distributes assets as it sees fit. In some cases, succession proceedings lead to a fair distribution of assets, but they come at a high price. Even in simple cases, an estate can cost thousands of dollars and reduce the value of the estate. Additionally, the benefit of knowing a testator’s intended gift is invaluable.
Wills are also crucial for those with minor children. Guardianship is established in the will if both parents are deceased, and multiple conditional guardians are usually named to watch over the child. Another benefit of a will is the ability to establish a will, allowing parents to “control from the grave” and keep assets out of their children’s hands until they reach a certain age. With a testamentary trust, children do not have access to significant assets until they are deemed mature enough to handle them, thereby protecting children from themselves.
2. Financial Power of Attorney
While powers of attorney are considered estate planning documents, they do not come into effect upon your death. Instead, they typically come into effect upon incapacitation. At its core, powers of attorney authorize someone to represent an incapacitated person in certain matters, such as financial or health matters. First, let’s break down financial power of attorney.
By establishing a financial power of attorney, you authorize one or more persons to act on your behalf in financial matters. The right to act on your behalf typically includes dealing in investment matters, maintaining bank account balances and signing financial documents. A grantee or proxy will have full authority over your financial affairs, so make sure you choose people you trust. Typically, attorneys will list one primary and multiple conditional attorneys when preparing this document.
3. Power of Attorney
Another incredibly important document to have on hand is a Health Power of Attorney, which gives an authorized representative the right to make health-related decisions for you should you become unable to work. The rights granted to an agent by a healthcare power of attorney include speaking to healthcare professionals about your care, deciding treatment pathways, and even deciding to stop caring for someone in a coma. As you can imagine, appointing an attorney-in-fact is a tremendous decision and responsibility for the attorney-in-fact. It is important to create a living will to guide your decision-making.
4. Living Wills
When making care decisions, proxies may be guided by living wills or living wills. These documents serve as a guide for both physicians and attorneys-in-fact. The addition of a living will to a succession plan can ensure that your last will is known and carried out, and can save a lot of anguish for those making decisions about your healthcare.
Contact a professional
While some states allow individuals to draft and execute probate documents, it is always advisable to hire a professional. An experienced lawyer will discuss your personal and economic circumstances with you and draw up a will according to your wishes.
Warning: The top cashback card we’ve seen now has an introductory APR of 0% through 2023
Using the wrong credit or debit card can cost you a lot of money. Our expert loves this top pick, which offers an introductory APR of 0% through 2023, an insane cashback rate of up to 5%, and all of that with sort of no annual fee.
In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.
Read our free review