When Is the Right Time to Start Your Estate Plan?
The process of estate planning is more than just creating a will. It also includes details on what your wishes are regarding medical treatment if you are incapacitated. Financially, an estate plan helps minimize estate taxes while detailing how you want your assets handled after you pass away. These assets can include your home, business, life insurance, stocks or property. An estate plan can also appoint someone to handle your affairs if you are unable to do so.
So, when should you start estate planning? As there is no guarantee from one day to another when it comes to life here on earth, estate planning must be completed while you are alive and have the capacity to legally enter into a contract. If you are incapacitated for any reason, your next of kin would determine what medical care you may receive, how your affairs are handled and many other important matters.
What Should Be Included in an Estate Plan?
What is included in an estate plan depends on the specifics of a person's life. For example, many estate plans include documents regarding health care and end of life decisions. Other parts of an estate plan provide for naming someone to control your property and handle your affairs in the event that you are not able to. Other estate planning documents include a will, trusts and powers of attorney.
Health Care and Estate Planning
Health care and medical decisions are addressed in almost all estate plans. This can include any life-saving measures that you would allow and those that you would not allow. An advance directive lets you guide your physician and family if you are not able to convey your wishes. This is often referred to as a living will. A health care proxy is the person or persons that you appoint to make medical decisions if something specific is not detailed in your advance directive. An advance directive takes the responsibility of making difficult decisions away from your family's shoulders.
Powers of Attorney and Estate Planning
A power of attorney is an essential estate planning document that gives another person the authority to act in legal or financial matters. It can be specific or broad as you wish. The person who is authorizing someone to act on his or her behalf is called the grantor. A durable power of attorney is an authorization that remains in effect if you become incapacitated.
Financial Matters and Estate Planning
Your financial matters can be addressed in an estate plan. A power of attorney can allow a trusted friend or relative to make financial decisions when you are not able. Trusts can be set up to provide for children after you pass away or become unable to care for yourself. There are many facets to this part of your estate plan. It is wise to consult with financial, tax, legal and insurance professionals.
Points to Remember in Estate Planning
Effective estate planning can minimize income and estate taxes. It can provide answers to medical treatment questions during times that you are incapacitated without burdening your family. Estate planning can protect the assets that you have worked so hard to accumulate. Finally, estate planning can provide money to meet anticipated and known expenses upon your demise.
An estate planning attorney's advice can be very valuable when you are determining what needs to be in your estate plan or to review your current estate plan to make sure it is still applicable.
The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.
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