All adults need to take the time to create an estate plan, but some are uncertain of where to start. Before you try to get your affairs in order, you need at least a basic understanding of what an estate plan can do and the tools you have available to make them happen.
One of the key points about estate planning is that you can set up each component so that it meets your specific needs. Think about these components as you’re deciding how to make your estate plan reflect your wishes.
Passing down assets
Your estate plan can include a will and trusts to get assets to your loved ones after you die. There are some key differences that you should know. For example, a will must go through probate court but a trust can bypass probate court. This means that your loved ones will have a bit more privacy if you set up trusts.
All trusts are classified as either revocable or irrevocable. A revocable trust is one that the creator retains control of so they can change the terms or dissolve the trust as they see fit. An irrevocable trust is one that the creator relinquishes control to a trustee. The creator can’t change or dissolve an irrevocable trust unless the beneficiaries agree or with a court order, but these trusts provide protection from creditors and have specific tax benefits.
Planning for incapacitation
Incapacitation is something you may think will never happen, but it’s best to have a plan set in case it does. You need to set up a powers of attorney designation for your finances and health care. The same person can have both duties, but you can name someone different for each. Be sure you choose someone who can do what’s best for you and not have any self-serving tendencies.
Getting your estate plan in order is one of the best things you can do for your loved ones, and it will give you peace of mind. Working with someone who knows your situation and is familiar with the estate planning process ensures you’re doing everything you can to pass down wealth and make things easier for beneficiaries when you’re gone.