The process of deciding who will receive your assets after you have been incapacitated or you have died, or handling your responsibilities after such occurrences is called estate planning. The goal would be that every beneficiary receives assets in such a way that it minimizes all sorts of taxes like income, gift, and state tax.
The majority of people believe that having this plan just means to draft a trust or a will, although, there is much more to it than that, like transferring all your possessions to your heirs the safest and seamless way possible. Here are some things that are involved in planning your estate that may come of use.
Trust Or Will
It may sound like something only the rich people can have since trust or will seem expensive and complicated. In case you think that way, your assessment would be wrong. Those should be your main concerns when deciding to deal with an estate plan, to be precise, those are its main components. It can be done even if you do not have huge financial assets to your name. Wills are making sure that the property you own is distributed according to your wishes. Some of them help limit estate taxes or any other legal challenges, although, having a will or trust is simply not enough. It is important what is the wording on the document. it should be written in a way that is consistent with the way you have left the assets that pass outside the will.
For instance, in case that you have already named your border as a beneficiary on your insurance policy or retirement account, it would be unwise to pass on the same asset to someone else, for example, your cousin since that decision could lead to competition and discomfort. Have in mind that such a decision could also leave them bitter towards you and each other which may even lead to a legal battle.
The Power Of Attorney
One of the things that are important is to draft a durable power of attorney. That way, the individual that you assign, or your agent, will act instead of you in case you are not capable of yourself. Without POA, the court may decide what will happen to your assets if you are found to be unable to make the decision. As the professionals at heritageelderlaw.com would agree: “A power of attorney is a critical component of any estate plan”. This document can provide your agent with the power to enter into financial transactions, transact your real estate, and make other necessary legal decisions as if they were you. It is quite often that in many households, spouses are set up to have such “powers” as attorneys. In some cases, it would even make more sense to have someone like your friend, trusted advisor, or another family member that is more financially knowledgeable act as an agent.
The Letter Of Intent
Another thing that is important is a letter of intent. That is a document that you will leave to your beneficiaries and executor. Its purpose is to define what you have decided about the particular asset after your passing. Some of those letters can provide details of your funeral or any other special requests you might have. Even though such a document may not be valid in the eyes of law, it would be wise to inform a probate judge of your intentions.
That will come in handy in distributing your assets, especially in the case that something is not valid with the will for any reason. Another document to think about is HCPA. It will designate someone, usually your spouse or a family member, to make important healthcare decisions on your behalf in case such a case arises. In case you decide that you want to execute such a document, you should have in mind that the best person you can choose is someone you trust and who will share your views.
As seen, there is more to estate planning than at first glance. It is not only simply a decision where someone would plan how their assets would be divided after their passing. It would be wise to remember that if you are dealing with estate planning to make sure that your family members as well as other beneficiaries are provided for.
Even though it is only the beginning, a will is a place to start, and for rest, the best would be to seek the counsel of someone who is a professional in the field and can give you the best possible advice on the matter.
