Having an estate plan extends beyond drafting a will or a trust. If you want to secure your assets so that it doesn’t fall into the wrong hands, you have to work with an estate planning lawyer to update your estate plans.
There are other essential components of a good estate plan, including how your assets should be handled and who should act on your behalf if you’re unavailable. Even if your estate plan doesn’t have all the components, it should at least have these two main components: a testament and a durable power of attorney.
In this article, you’ll learn more about the key components of an effective estate plan. Continue reading to learn more:
- Wills and Trusts
A will or a trust should be part of your estate plan, even if you have one property. A Will ensure your property is secured and distributed according to your wishes (if drafted according to state laws). Some trusts help limit estate taxes and reduce the effect of legal challenges in case you face any.
Your will or trust should be written in a way that it’s consistent with how you’ve handed down the assets that pass outside of the Will. For instance, you don’t want to bequeath an asset to a second relative when you’ve already named another as a beneficiary on a retirement account or insurance policy. Also, always name a guardian for your underage children otherwise, the court may decide to place your children with a family member or put them in custody of the state.
- Durable Power of Attorney
Drafting a durable power of attorney (POA) is important so that someone you assign can act in your stead when you’re not available. Without a power of attorney, you give the court full right to decide what happens to your assets and the court’s decision may not go according to your plan.
This document empowers your agent to transact real estate and make financial decisions in your stead. This type of POA can be rescinded by you at any time of your choosing. It is advisable to have a family member, or trusted advisor who is knowledgeable about finances as the agent.
- Beneficiary Designations
A part of your possessions can pass to your heirs without being recorded in the Will which is why you must maintain a beneficiary and a contingent beneficiary on such an account. If you fail to name a beneficiary, or if the beneficiary is unable to serve, a court could do as they please with your property.
- Letter of Intent
This is a document that you leave to your executor or a beneficiary. A letter of intent is meant to dictate specifically what you want to be done with your property after your death or incapacitation. This document may not be legal in court, but it helps inform a probate judge of your plans and may help when your assets are being distributed. A letter of intent can come in handy when the Will is considered invalid for whatever reason.
- Healthcare Power of Attorney
A healthcare power of attorney (HCPA) appoints another individual (probably a spouse or family member) to make healthcare decisions on your behalf if you are incapacitated. It’s best you appoint someone you trust and you would likely make decisions you would agree with. Also, you should appoint a backup agent if your initial pick is not available when they’re needed.
- Guardianship Designations
If you have underage children, picking a guardian is extremely important. Ensure the individual or couple you choose is trustworthy, financially sound, and has a genuine interest in your kids. At the same time, you should have a backup or contingent guardian in case of unforeseen circumstances. Otherwise, a court could decide that your children live with a family member or put them into foster care.
Do I Need an Estate Plan?
Everyone may not necessarily need an estate plan, but they must have a will. Estate planning can be done even if you don’t have substantial assets as it only requires important information like appointing guardians for your kids and ensuring your assets go to the beneficiaries you choose.
The Bottom Line
Estate planning involves more than writing a will and allocating your assets to chosen beneficiaries. It also involves ensuring your family members and beneficiaries have access to your assets whenever you’re incapacitated or deceased.
At Citadel Law Firm, we help our clients formulate and document their estate plans. We will formulate estate plans that are peculiar to your situation. When you work with us, you won’t have to worry about losing your assets to the state as we will ensure only the right beneficiaries have access to your assets.
Contact us to learn more about our services today!