Why You Need Estate Planning
When the subject of estate planning comes up many people think this is just for the super wealthy. The reality is if you have a family, own a home or other assets, you need some basic estate planning documents in place. Without this, your assets can be tied up in probate court, which can be very time consuming and expensive for those left behind.
To get started, take an inventory of all your assets including investments, retirement savings, insurance, real estate and business interests. Then decide who you want to inherit your assets when you die. Also, who do you want to handle your financial affairs or medical needs if you become incapacitated?
All estate plans begin with a will. This document names who will receive your assets after your death, whether outright or through a trust. It also names an executor who will manage these affairs and could nominate guardians for your children. One important point to remember is that beneficiaries listed on your insurance, financial or retirement accounts receive those assets directly, and avoid probate court, regardless of what the will states.
Next, a power of attorney names who will handle your financial affairs should you become incapacitated. This can be as specific as only allowing payment of you bills or broad ranged enough to handle everything. You should also include a medical power of attorney, a document that specifics who will make medical decisions for you if you are incapacitated.
Finally, you may need a trust to supplement your will. This document further specifies how and when your assets will be distributed upon your death. This will allow you to reduce or possibly eliminate your estate and gift taxes to your heirs and offer greater protection from creditors and lawsuits.
These are just the basics and everyone’s situation is unique so it’s important to work with an attorney that specializes in the area of estate planning. Also, you need to review this plan, and your beneficiaries on financial and insurance accounts, on an ongoing basis. This is especially important if you have major changes in your life situation or assets.
