It seems like the subject of estate planning only makes waves when a celebrity dies. Prince dying without a will is just the latest lesson people can learn about the importance of having a complete estate plan.
What constitutes a complete estate plan? That answer will vary from family to family. However, three elements are widely used among people, regardless of your net worth.
This is the document most people think of when they hear the words “estate plan.” You probably have some items that you’ll want to pass on to your loved ones. It may be the family china, photo albums or jewelry and other family heirlooms. Your will is the document that allows you to make sure these items go to the people you want.
Depending on the types of assets you own, you may need a trust. The reason is that assets in a trust bypass the probate process. Probate can be an expensive and time-consuming process. Having appropriate trusts in place can help make administering your estate a less difficult process for your loved ones.
Durable power of attorney
A power of attorney document allows you to name someone to contribute to making decisions on your behalf if you become incapacitated. These can be financial or medical decisions that need to be addressed.
There are two primary powers of attorney: durable and non-durable. A durable power of attorney remains in effect if you become incapacitated. A non-durable power of attorney expires if you become incapacitated, making it ineffective when it comes to incapacity planning. Having a durable power of attorney form in place ensures someone with your best interests in mind will be making decisions on your behalf.
Estate planning isn’t just for the wealthy. It’s for anyone who has specific wishes about end-of-life decisions and distribution of assets after death. Crafting an estate plan tailored to your needs can provide you and your loved one’s greater peace of mind.