According to some attorneys, having an estate plan can be more helpful to families than just a will. For those who may not know what an estate plan is, it is a series of documents that provide, among other things, instructions regarding how your assets should be distributed upon your death. It can include a will, the assignment of power of attorney, and a living will. The combination of all of these documents will give clearer communication to your surviving family members after you’re gone.
One thing to keep in mind when establishing an estate plan is to draw up a plan regardless of your net worth. Many people think that an estate plan is unnecessary if you don’t have a lot of money or any property to distribute, but this simply isn’t true. Providing input even on a little amount of money can go a long way.
The next thing to think about is establishing a will and a living will. A will explains exactly where you want all of your assets to go when you die, where as a living will dictates any medical wishes you may have in the event that you become incapacitated.
Also, take advantage of trusts. A trust can help family members figure out how and when your assets will be distributed. They can also help reduce your estate and gift taxes and allow your heirs to avoid probate court.
The last two things to remember in estate planning have to do with communication and understanding estate tax laws. Making sure that you understand exactly how much tax will need to be paid on your estate will allow you to better communicate all intentions to your family. By planning for problems now, you may be able to avoid them after you pass away.
Source: ABC News, “Why estate planning is critical for your family,” Sept. 11, 2012