What Is Estate Planning? What Should Be The Goal Of An Estate Plan?
Estate planning is for everyone. Whether a person is 20 years old or 80 years old, estate planning is a tool they can use to put their assets in one place and ensure that those assets will be distributed according to their wishes upon death. Having an estate plan allows people to plan for the avoidance of the costs of court intervention. In addition, it can help people protect their assets from creditors.
When Is The Best Time To Start Planning For Your Estate?
The best time for a person to start planning for their estate is when they begin accumulating assets that they want to protect or ensure go to a certain person upon their death. For example, if someone buys a new home, they should have an estate plan that accounts for the eventual distribution of that asset to a beneficiary.
What Is A Will? Does A Will Need To Be Part Of Every Estate Plan?
A will is a document that states the person’s final wishes, and should be a part of every estate plan. For example, a person’s will might state that they want to leave all of their assets to their spouse or children.
Are There Any Limitations Associated With A Will? Is A Will Enough On Its Own?
Wills definitely come with limitations, and in my opinion, to only have a will is insufficient. This is because a will doesn’t actually effectuate the transfer of assets, which means probate will still be necessary. Probate should be avoided because it is expensive and time-consuming. This is why I always recommend having a trust; the trust will effectuate the transfer of assets and eliminate the possibility of probate.
What Are The Key Components Of An Estate Plan?
There are four key components of an estate plan: a will, a trust, a power of attorney, and a health care directive. The two basic types of trusts are revocable and irrevocable, and there are several subcategories of trusts that may be helpful to certain people under certain circumstances. Power of attorney documents appoint someone to speak on behalf of another person in the event of that person’s incapacitation. Health care directives grant someone the authority to make health care-related decisions on behalf of another person. For example, if an individual wants their sibling to have this authority rather than their spouse, then they could create a health care directive indicating this.
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