In this blog post, we are going to reveal everything you need to know about estate planning. Estate planning is the process of preparing for the transfer of an individual’s assets or wealth after he or she has passed. This includes everything from assets and pensions to debts, personal belongings, cars, real estate, and pensions. It also includes life insurance.
Why is estate planning important?
There are a number of different reasons why estate planning is deemed so important. Essentially, estate planning ensures you have full control over who gets your belongings. It ensures that there are no unintended beneficiaries. There are other benefits associated with this too. This includes the fact that it lowers the chances of ugly legal battles and family drama. Estate planning can also lower the taxes on what you leave behind. Finally, it gives you the chance to name a guardian for your child in the event of an early death. This is especially important because you want to make sure that your child is left with someone who you trust completely.
What should you include in your estate planning?
Death is a topic that nobody likes to think about. Yet, surely you want to make sure your assets are left to your loved ones once you pass away? This is what estate planning is all about. This process involves you deciding how you want your assets to be distributed once you have died. In some instances, assets may be distributed if you are in a position whereby you can no longer make your own financial decisions. Let’s now take a look at some great advice on starting with your estate plan by revealing what it should include. So, let’s find out…
Power of attorney
A power of attorney is an individual who will act on your behalf should you become disabled. If you do not declare a power of attorney or powers of attorney, the situation may arise whereby the court decides what happens with your assets. In terms of choosing a power of attorney, this individual is going to have a lot of responsibility and power, and therefore, it is imperative that you choose someone you trust. It is a wise idea to give the individual you ask some time to think about the role. You want to make sure that they feel comfortable with the fact that you have chosen them. Your power of attorney can be your partner, spouse, civil partner, friend, or other family member.
Some people decide to choose a professional, for example, a solicitor. You can select more than one attorney, known as joint attorneys. This can be a good idea because it means that decisions do not fall entirely on one person’s shoulder. You need to decide if they are going to make decisions jointly or jointly and severally. The former means that they work together on all matters. The latter means they may act separately or together, as per their own choosing.
A will is one of the most important parts of any estate plan. A lot of people do not believe they need a will, as they don’t feel they have significant assets. However, regardless of how much or how little you have, a will ensures that your individual wishes are carried out once you have died. Therefore, it is imperative. It is highly recommended that you use the help of a professional when constructing your will. Not only will they aid with financial planning, but also they will ensure your will is written in the correct manner.
There are a number of different mistakes people make with their will when they do it themselves, and this can make the document invalid. Examples include failing to appoint guardians, not accounting for debts, not making proper exclusions, appointing inappropriate executors, incorrectly signing the will, and so on! Professional help is definitely the best way to go.
Designations of beneficiaries
In addition to the points that have already been mentioned, you also need to consider that there are sometimes possessions that can be passed onto people without being mentioned in your will, for example, life insurance or a 401(k) plan. In these instances, you will need to name a beneficiary on the account.
This is a clause that is often included in the will. However, if it is not, it is imperative to deal with guardianship designations in your estate plan. Essentially, this relates to picking a guardian for your child in the event that you die when the child is still a minor. The importance of this is something that needs no explanation. After all, you want your child to be looked after properly when you are no longer there.
Letter of intent
You will also need to draw up a letter of intent. This is simply a document that will be written by you for your chosen executor. It will state all of your wishes. This can be anything from details regarding what you want to be done with a specific asset, to information relating to funeral plans.
So there you have it, the five main things all estate plans should include. As mentioned earlier, seeking expert advice is something that comes highly recommended. Not only will you have help with asset and wealth management, but also you will have the peace of mind that your documents are constructed in line with the law.