The word “estate planning” is often associated with affluent families. Only those who own sprawling mansions and cross-border assets are believed to need an estate plan. Creating a comprehensive estate plan is indeed imperative for high-net-worth individuals and affluent families. However, even those with a few properties, investments, and other assets also need estate planning. You don’t need multiple businesses and assets worth millions of dollars to think about estate planning. This type of financial service is for anyone who wants to ensure that their assets are rightfully inherited by their loved ones after they pass away. If you’re not sure what estate planning is and whether you need it or not, this post can make things clear for you. Continue reading to find out more about estate planning.
What is an Estate Plan?
Anyone doing a job or business typically has an estate that includes a home, car, investments, other real estate, savings accounts, life insurance, jewelry, furniture, and other valuable possessions. Whether all your assets are worth millions of dollars or a few thousand dollars, there’s no way you can take it with you when you die. So, what happens to your savings and assets after your demise? This is where estate planning comes in! An estate plan is a set of legal documents that includes all your assets and mentions who will inherit your property when you’re no more. This legal document ensures that your last wishes are fulfilled and the future of your loved ones is secure.
Every individual wants to ensure the financial safety of their loved ones. But life is unpredictable and this uncertainty makes it necessary to think about the future of your family. With an estate plan, you can state your wishes and ensure a smooth transfer of assets in the event of your death or incapacitation. An estate plan is not the same as the Will. It is a comprehensive plan consisting of documents that get effective even during your lifetime. Unlike a Will which only comes into effect upon your death, an estate plan involves multiple documents that you might need during your life. Will is a part of the estate plan and other components of the estate plan include setting up a trust account, naming guardians for minor children, settlement of estate taxes, and other important details. To create a legally valid estate plan, you need to hire an experienced estate planning attorney.
Components of an Estate Plan
With an effective estate plan, your assets can be smoothly managed and distributed. This plan includes multiple documents that allow management or transfer of your assets if you die or become incapacitated. Whether you want to leave a legacy behind to a charitable cause or want to fund grandchildren’s education, estate planning addresses all your wishes. An experienced estate planning attorney can also help in minimizing estate taxes by setting up trust accounts. You can also name guardians for your minor kids, executor of the estate, as well as beneficiaries of life insurance. This comprehensive document also has provisions to add instructions for medical care in event of disability or funeral arrangements.
This document is of great help in case of mental or physical incapacity. In the case of disability or incapacity, only the person named in your estate plan will have the authority to sign on your behalf. It includes Financial Power of Attorney, as well as Durable Power of Attorney that gives legal rights to another person for handling your non-health-related issues. A professional such as Certified Financial Planner can draft an estate plan that includes all important documents such as:
- Will and Last Testament
- Financial Power of Attorney
- Medical Power of Attorney
- Healthcare Directives
- Trust and More!
