Ideal, an estate plan should be amended each time your life undergoes major change – such as getting married, having children, moving residence, divorcing or divorcing the other party and/or divorcing yourself – along with designating beneficiaries and an executor.
Unnecessary taxes could cause your assets to go where you don’t intend. To safeguard against this happening, create an estate plan – including will and trust documents.
Creating a will
Establishing a will is a crucial step in estate planning, enabling you to name an executor and beneficiaries as well as provide instructions on how to divide up property and assets. Furthermore, creating a will can also provide plans for minor children (if any) and pets; additionally it can offer strategies to minimize estate taxes, such as creating trusts or making charitable donations.
Before writing your will, it’s essential to take an inventory of all your assets. Make a list of everything you own with their estimated value and consider any debts as well. There are online tools that can assist with this process but it would be wiser to consult a legal expert as this process might involve legal questions that need answers as you navigate your way through.
As you consider how to distribute your assets, keep in mind that if a beneficiary passes before you do, their gift may become part of the general pool – this can make dividing them more complicated.
Creating a trust
Establishing a trust is a crucial component of estate planning. By giving assets directly to heirs while bypassing probate proceedings and taxes, creating one allows you to protect assets while giving heirs access without incurring legal costs or incurring taxes on them. You can fund it using bank accounts, real estate investments or tangible personal property – just remember it takes time for these titles to transfer. Choosing an individual trustee or corporate trustee with professional unbiased management may reduce family conflicts.
A trust can also reduce federal estate tax, avoid probate proceedings and keep your estate private – but they aren’t suitable for every situation; to be safe you should seek advice from financial or legal professionals before creating one. Outline your goals and needs so you can select an appropriate type of Trust such as revocable living Trust that allows assets to transfer during life without going through probate proceedings.
Creating a power of attorney
A power of attorney (POA) is a legal document that authorizes someone else to make financial and medical decisions for you, creating a fiduciary relationship between yourself and the agent you appoint. When selecting an agent it is essential they be trustworthy as this POA also serves as instructions for memorial services, funeral plans or burial arrangements or even where you want your ashes scattered after death.
Before creating a power of attorney, take an inventory of your physical assets. This should include valuable items such as furniture, artwork and vehicles as well as debts or open credit accounts that you owe and any automatic donations you’ve made to charitable organizations.
Writing a letter of instruction that details your mindset and values is also beneficial, helping your executor better understand your wishes while also avoiding conflict among family members and saving them from the expense associated with probate court procedures.
Creating a living will
Create a living will (or health care proxy) as the first step of estate planning. A living will allows you to state your medical preferences regarding end-of-life care, such as whether or not life-extension treatments and procedures should be pursued. Furthermore, this saves family members from making tough decisions themselves and can decrease any chance of disagreements regarding your wishes.
An attorney should draft your living will to meet state requirements; however, you can use software available from legal document websites or local bar associations to prepare it yourself.
Not only should you create a living will, but you should also prepare a letter of instruction that details your wishes for your family members after your passing. This document should include funeral, burial and memorial arrangements as well as any final messages to them from you. Furthermore, this letter of instruction should include online accounts and passwords so your executor may access them if needed.