Estate Planning – Is It for Me?
Estate planning is for you if you own real property — even with a mortgage — or have children. Almost every adult has an “estate,” and a standard trust-based plan (living trust, will, powers of attorney, and a medical directive) is the most reliable way to make sure it reaches the people you love, without court involvement.
A 2022 survey by caring.com found that less than a third of Americans had some form of estate plan in place. When asked why, a common response was that they simply didn’t believe they had enough assets to need one. The reality is that almost every adult should have a plan in place should something happen to them, such as death or incapacitation.
But where does one start? Estate planning can seem like a daunting process, and it’s hard to know what you need, why you need it, and where is the best place to go to get it done. For most people, a standard “trust-based” estate plan is a great way to ensure that your assets will be properly and efficiently distributed to your loved ones.
Trust-Based Estate Plan
A trust-based estate plan consists of the following:
- A revocable living trust. A revocable living trust is a legal entity that holds title to property and assets to be managed during an individual’s lifetime. A husband and wife can form a joint revocable living trust. During their lifetime, they typically serve as trustees of their trust and have full power and authority over the assets held in it. A successor trustee is also named and given instructions regarding how the assets of the trust should be distributed to named beneficiaries.
- Will. A will is a legal document that takes effect only upon someone’s death. When used in a trust-based estate plan, a will works in conjunction with the trust and ensures that all personal property (furniture, vehicles, family heirlooms, etc.) funnels into the trust upon the individual’s passing and gets distributed pursuant to the trust’s instructions. A will also allows parents to appoint guardians over their minor children should something happen to both parents.
- General power of attorney. A power of attorney is a legal document that allows an individual to appoint someone to manage their property or financial affairs in the event that they become physically or mentally unable to do so themselves.
- Medical power of attorney. A medical power of attorney allows an individual to appoint someone to make medical decisions on their behalf if they are unable to do so themselves. It also allows access to medical history and records, health insurance information, and physician information to assist in making educated decisions about care.
- Medical directive / living will. A medical directive or living will provides instructions to family members and physicians regarding the specific type of medical treatment an individual wishes to receive, or not receive, if they are no longer able to make medical decisions because of a terminal condition or being permanently unconscious.
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