You’ve worked hard to build a successful and rewarding life. You have assets you want to safeguard for yourself and your loved ones. As well as special wishes you want to be fulfilled if something unexpected happens.
The good news is that there are many ways to plan and protect your interests. Including hiring an attorney to handle the documents for you.
Estate planning is an umbrella term that describes the process of arranging what will happen with your personal and financial assets after you can no longer manage them.
There are many types of estate plans. But some of the most common include wills, trusts, and life insurance with a final expense provision or death benefit clause. Let’s explore each in more depth:
A will is a legal document that spells out how you would like your assets distributed after your death. In many cases, a will also direct that a loved one serves as your executor for the terms of the will.
An executor is a person responsible for executing your will after you pass away. And making sure that your wishes are carried out concerning your assets.
Every state has its guidelines for the requirements to write a will. But there are some general concepts you can keep in mind when writing one. You should be of sound mind when writing your will.
You should be of sound mind when writing your will. And you should sign and date the document. Your will must be written according to your state’s law.
It’s a good idea to seek the counsel of an attorney when writing your will to ensure that all of your wishes are honored according to the law.
A trust is a legal concept that allows you to place assets into a legal entity that can manage the assets for the benefit of both you and the trust’s beneficiaries. The trust can be set up to help your family members with the management of assets, such as money, real estate, stocks, or other valuables that you wish to pass down to them.
Like a will, trusts must be written according to the law of your state. If you are the creator of the trust (also known as the “grantor”), you will be responsible for appointing a trustee to manage the trust’s assets on your behalf.
You will also be responsible for naming the trust’s beneficiaries, who will receive the assets of the trust after you die.
Life Insurance and Final Expense Provisions
As noted above, a will provides for the distribution of assets after your death. An insurance policy, however, can provide for the payment of final expenses, including funeral costs, medical bills, and outstanding debts.
In addition to the death benefit, some policies also offer cash value that can be used for other purposes. Such as the securement of a mortgage or the funding of a child’s education.
Be sure to carefully review the policy’s fine print. As there may be limitations on the amount or types of expenses that can be covered by the death benefit. Many life insurance policies also allow you to choose how the death benefit is applied.
You can elect to provide a lump-sum payment to recipients. Or to pay out the death benefit in installments over some time. This can help provide a financial cushion while also giving loved ones time to adjust to the loss and process claims on other assets.
The Importance of Advance Care Planning
As you outline various aspects of your estate plan. You may come to see how important it is to ensure that your healthcare and financial decisions are documented. Documented in a way that communicates your wishes to loved ones.
Advance care planning involves documenting and storing important medical information with your healthcare providers. As well as selecting a person who will be responsible for making important medical decisions on your behalf.
This person is commonly known as an “attorney-in-fact“. Or someone designated by you in writing to make medical decisions on your behalf if you can’t make them yourself. Many people don’t know that the use of an advance care directive is not dependent on the existence of a will.
In other words, a person who has prepared for his or her end-of-life care in advance will still have the authority to dictate his or her treatment in the presence of a will. Advance care planning can help to limit the impact of any misunderstandings or miscommunications. Especially ones that may arise in the event of an emergency or sudden illness.
Final Words: Wrapping Up
The best estate plan is the one that you create with your loved ones and estate planning experts to suit your unique set of circumstances. No two estate plans are exactly alike, and no one type of planning is right for everyone.
That’s why it’s so important to review your options, engage in open and honest discussions with loved ones about your plans. And make sure that you have everything in place to protect your future!
Hopefully now you have a better idea of what estate planning is all about. You can start exploring your options and creating a personalized plan.
Whether you choose a will, a trust, or another type of estate planning strategy, you’ll be sure to safeguard your assets and special wishes with a plan that truly reflects your goals and values.