Your broader estate plan is a legal instrument that’s used to assess what will happen to your estate after you pass away.
There are many moving parts in an estate plan that you should be aware of. These are a few of the most basic elements of a comprehensive estate plan.
A will is the most commonly made document in an estate plan. Wills are often the first thing people draft. People name beneficiaries, allocate assets and leave instructions concerning their wishes using a will. You can update a will whenever you want – people often do so every two to three years.
There are a few risks that people take when distributing assets via a will. For example, your heirs may have estate taxes taken from their inheritance and a spiteful or confused relative may dispute your will. You could, instead, set up a trust to avoid these issues concerning asset distribution, and use your will for a few other purposes. A trust is generally permitted to bypass probate and is not easily challenged.
When it comes to the distribution of your estate, an estate executor will handle most of the hard work during probate. For example, they will likely collect your death certificate, pay taxes, gather assets, contact heirs and, finally, distribute assets.
Power of attorney
An estate plan can also feature a few important resources that aren’t focused on asset distribution. For example, you should strongly consider naming a power of attorney (POA). A POA could be granted the authority to handle your finances and health matters if you’re incapacitated after a sudden accident or after developing an illness.
Child guardian designation
If you have children, then you may worry what would happen to them if you are incapacitated or die before they are adults. You could name a child guardian to take on your role and raise your children. A child guardian would have many of the same rights as you would. If you don’t name a guardian, the state will determine with whom your child will reside.
Considering making an estate plan? Seeking legal guidance can help to ensure that you have access to the additional information that will allow you to make sound, informed and enforceable choices.