Everyone needs a basic estate plan. This is a set of documents you put in place that helps to ensure that your wishes are fulfilled when it comes to the management of your personal life and your finances in case you become disabled, and that controls the distribution of your property when you pass away.
The Makeup of a Basic Estate Plan
Generally, a basic estate plan will include the following documents:
- A Last Will and Testament: You use your Will to express your wishes regarding how your estate should be distributed after you pass away, as well as to appoint a Guardian for any minor children you leave behind.
- A Revocable Living Trust: Instead of basing your estate plan on a Will, you might choose to base it on a Revocable Living Trust. This allows you to retain control of your assets during your lifetime, and avoid probate while ensuring that your property goes to your intended beneficiaries when you pass away. A Revocable Living Trust also allows for the management of your assets in the event of your disability.
- A Durable Financial Power of Attorney: With a Durable Financial Power of Attorney, you designate a trusted agent to access your bank accounts, pay your bills, and otherwise manage your finances for you in the event of your disability.
- An Advance Healthcare Directive: This document allows you to express your wishes concerning medical treatment in case you are gravely ill or injured, and it allows you to appoint a healthcare agent to make medical decisions on your behalf if you cannot speak for yourself.
Advanced Estate Planning
There are certain situations that call for estate planning that goes beyond the basics. If you are in one of these situations, you and your attorney will work together, using additional estate planning tools to protect the interests of you and your loved ones. What situations call for advanced estate planning? Here are a few examples:
- Planning for a child with special needs. If you have a child with a disability, and that child relies on federal, state, or charitable benefits for his or her care, then you’ll need to plan your estate carefully. A Special Needs Trust allows you to leave your child an inheritance without jeopardizing his or her benefits.
- Planning for a business. If you are the owner of a business, your estate plan will need to address what will happen to your business in the event of your death or disability. Advanced estate planning allows you to put in place a succession plan for your business to help ensure a smooth transition if you can no longer maintain an active role in the day-to-day operations.
- Tax planning. Advanced estate planning allows you to anticipate and minimize your estate and gift tax bills.
- Leaving a Legacy. Advanced estate planning gives you the tools you need to leave a lasting financial legacy, ensuring that multiple generations within your family benefit from your lifetime of hard work and careful planning. Using advanced estate planning, you can also leave a legacy to your favorite charities.
When you meet with your estate planning attorney, he or she will assess your financial situation as well as the needs of your family to determine whether your estate plan needs to go beyond the basics.
Stephen A. Mendel, Estate Planning Attorney
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