When many people hear the phrase “Estate Plan,” they think it does not apply to them as they do not feel as though they have an “estate.” You don’t need to have a mansion and millions of dollars in order to have an estate. Anything you own-your home, cars, bank accounts, personal belongings, etc.-are all part of your estate. And following your passing, your loved ones will have to know how to handle all of it properly-this is where an estate plan comes in.
A Simple Estate Plan
1. What is a Will?
A Will is a document that directs how your want your property to be distributed after your death. If you pass away without a Will, your estate will be divided according to state intestacy laws. This can mean that individuals will receive more or less than you wish them to receive or they may be excluded completely. A Will can allow you to do numerous things, including excluding certain individuals, leaving unequal shares to children, leaving gifts to specific people, or naming a permanent guardian for minor children.
2. What is a Durable Power of Attorney?
A Durable Power of Attorney is a document that gives another person the authority to operate on your behalf if you should become incapacitated. This could include things such as managing your finances and taxes, overseeing distribution of gifts, making medical decisions, and managing or selling property. If you don’t have a Durable Power of Attorney, your loved ones will likely have to go to court in order to manage your affairs. This can be time consuming and costly and, often, these decisions need to be made quickly.
3. What is a Health Care Directive?
A Health Care Directive designates a health care agent and provides instructions regarding your health care in your incapacity. This allows you to clearly state your wishes on end-of-life matters such as resuscitation, life support, and administration of nutrition and hydration. It also allows you to give an individual the authority to ensure your wishes are followed.
Additionally, for some people, an estate plan should go a step farther and include a Trust.
Trusts can be revocable or irrevocable depending on your unique situation. With a revocable trust, you can retain control over the assets held in trust, while ensuring they are ultimately distributed according to your wishes and avoid probate. An irrevocable trust takes the assets out of your control and puts them in the hands of a trustee-this can be useful if you have concerns about creditors or providing the most protection possible for your estate.
Families and financial situations are unique and complicated. Estate planning should put your mind at ease and make life simpler. A good estate plan can help accomplish that-even if you’re not a millionaire.