The idea of planning your estate might seem a little intimidating at first but it actually follows some very basic logic: you have assets and you want to determine what happens to those assets after you die.
To do this, you make a plan – an estate plan – that not only lists your assets but also specifies who they should go to when you pass away. Your plan can consist of a number of different legal documents, including a Will, one or more trusts, powers of attorney and healthcare directives to name just a few.
Each of these documents has a specific purpose and provides you with a certain benefit.
A Will for example can be the foundation of your estate plan or it can simply supplement a Living Trust that holds the majority of your assets. You can also create trusts to provide for disabled dependents and minor children if you wish.
A power of attorney designates a person to speak on your behalf regarding financial or medical decisions, depending upon the powers you bestow on your representative. You might also want to include a Living Will in your plan, to ensure that your wishes are followed if you should ever be unable to make your own decisions regarding your health care.
If you don’t make a plan, the State will distribute your assets for you and there’s simply no way to know how that distribution might turn out. Understanding how estate planning works is the first step to building a solid plan for you and your loved ones.