Estate planning is much more than simple will writing. Although will writing is an integral part of it, estate planning involves decisions about your health, finances or more in the event of your death or incapacitation. Ideally, it would be best if you started estate planning as soon as you become an adult and then keep updating it regularly or as per need.
An estate plan does not only determine what happens to your assets after you die but also involves other important things like transferring power of attorney and trust. The person you give power of attorney to will be eligible to make legal decisions for you in case of your incapacitation or death. A trust takes care of money management on behalf of your beneficiaries. Apart from deciding how your property will be divided among your beneficiaries, you can also include a whole business succession plan in your estate plan.
As so many important decisions depend on your estate plan, it is essential to make sure that you make it the right way. To help you do this, we will discuss the five key elements that every estate plan should include in this article. These elements serve as a solid basis for a complete, compact, and easy to administer plan. When somebody departs, how the assets that a deceased has left should be distributed becomes crucial. Also, beneficiaries should be aware of what happens to the assets you leave them in the event of your death. Likewise, there is a need of fulfilling legal obligations. To deal with such a situation, an estate plan comes in handy.
It is necessary to incorporate the names of beneficiaries. Not dealing with the issue relating to the estate can at times lead to protracted conflicts. So, establishing the guidelines for distributing one’s property, stocks, and other assets after death is a wise thing to do. An estate plan normally includes a last will and testament, living will, power of attorney, medical directive, and anything else related to your legal situation.
The use of wills is a long-standing tradition in the United States. ‘Will’ is a crucial legal document that dictates what should happen to your assets after you die. For a will to be valid, it’s required to be signed by two parties who are present when the will is made and two people who are not beneficiaries of the estate or receive gifts under conditions stated in the will.
Wills are governed by state law, so the forms are different from one state to another. However, all wills have certain elements in common. The most important one is that they are not just about what happens to your property when you die, but also how and where you would like to spend your final days or where you want to be buried or cremated. You can change or revoke a will at any time before it becomes effective by making a new one and executing it.
A trust equals a guarantee and gives the trustee an exclusive right as to when and who should receive the property or an asset.
A revocable trust is a trust created during the grantor’s lifetime, with an agreement that it can be revoked at any time. It is different from irrevocable trusts because the grantor has the right to change or revoke it at any time. A revocable trust is an agreement created by one person for their own benefit that they can change or revoke at any time.
A person can irrevocably trust another person with their money or property. The person who is given the money or property is called a trustee. The person who gives the property to the trustee is called a donor. The trust is not legally created unless the donor has made some formal declaration of it in writing, said nothing to revoke it, and done nothing to change his mind about what he had done.
Trust law is one of many areas of law that are affected by advances in technology. One example would be banks that allow beneficiaries to access their online bank accounts using a mobile device rather than a traditional card and PIN combination for authentication purposes.
Power of Attorney
‘Power of Attorney’ is important in making a proper estate plan. He is entrusted with managing the whole process in the wake of any ups and downs in an owner’s life. He is given the right to intervene where it is necessary. He is critical in the authorization to carry out any business activity associated with the estate.
The onus lies with the immediate relative in the absence of power of attorney. In a case of a married couple- with the demise of one, the designations automatically fall on the spouse. Also, the court may intervene under such circumstances to specify a guardian.
Health Care Directive
An individual’s health care directive is a document that outlines an individual’s wishes for their health care in the event of any medical emergency. These documents are often referred to as living wills but can also be called advance directives, among other terms.
The directive will require the individual who creates it to designate someone to make decisions about their medical treatment if they can no longer do so themselves. The designated person will be called the agent or proxy. This document can be legally binding if written correctly and signed by two witnesses, but it still needs to be filed with the state before it becomes enforceable.
It is necessary to make sure that the plan is up to date in terms of beneficiary designations. This part of the plan is instrumental in ensuring who is endowed. In layman’s terms, the one who will be the beneficiary after the demise. Beneficiary designations sometimes appear more important than others and require review regularly. You should review these designations at least once a year.
These five elements are necessary to make a compact and concise estate plan. In the first place, having a plan makes things easy to manage. In addition to that, the plan serves as a sole source on the basis of which your desires will be carried out. Since the importance of an estate plan is second to none, concerned persons and stakeholders should maintain it regularly. Estate planning attorneys should be kept abreast with the advancement and changes in will, desires, and plans.