More than 50% of Americans think that it is important to have an estate plan, but only 33% have a will or living trust.
This may seem like a lot, but it’s still a lower number than those in need of an estate plan. In reality, nobody can predict when their last will shall be put into play. Therefore, it’s good to have as many safeguards in place as possible.
So, what is an estate plan? You’ll soon find out if you keep reading. The following will detail what they are, why they’re important, and how you can create one of your own.
The Basics: What Is an Estate Plan?
An estate plan is a comprehensive plan that details how you want your property and assets to be distributed after your death. It can include everything from who you want to receive your possessions, to how you want your debts to be paid off. Estate planning basics also include making provisions for your care if you become incapacitated.
What Is Included in an Estate Plan?
Your Estate Plan will be made up of several documents. Each document is important in its way, and together they form a powerful representation of your final wishes. Listed here are the most common estate planning documents:
1. Guardianship
An estate plan is a set of instructions that dictate what will happen to your assets and property after you die. A guardianship is a legal arrangement in which someone is appointed to manage the affairs of another person who is unable to do so themselves.
2. Wills
A last will is a document that provides instructions for what should happen to your property and other assets after you die. It can also include provisions for how your debts and taxes should be paid, and who should care for any minor children you have.
3. Living Trusts
A living trust is a type of estate planning tool that can be used to manage your assets during your lifetime and pass them on to your beneficiaries after you die. Trusts can be revocable or irrevocable, and they can be used to manage properties, money, investments, and other assets. Either an irrevocable or revocable living trust can also be used to protect assets from creditors, taxes, and probate.
4. Powers of Attorney
A power of attorney is a legal document that gives someone else the authority to make financial or medical decisions on your behalf. Including power of attorney in your estate plan ensures that your wishes will be carried out even if you become incapacitated and are unable to make those decisions yourself.
5. Health Care Directives
An estate plan is a set of instructions for how you want your affairs to be handled if you become incapacitated or die. A health care directive is a part of your estate plan that designates someone to make medical decisions on your behalf if you are unable to do so yourself. You can also use a health care directive to express your wishes for end-of-life care.
Writing an Estate Plan
Writing an estate plan is not difficult, but it is important to work with an experienced attorney to ensure that your plan is complete and properly executed. Now that you know how to answer the question “What Is an Estate Plan?”; it’s time to create one!
For more on planning your future and building your future, take a look through our blog posts.
