Many Texas residents know that it is extremely important to make arrangements for your estate. However, did you know that over 50 percent of adults do not have a will? According to a 2011 survey conducted by Harris Interactive, 92 percent of adults under age 35 have not made any estate plans.
People assume their family will automatically inherit any assets they leave behind; however, assets are held in probate court and distributed according to state law. This process can be expensive and emotionally exhausting.
Efficient estate planning involves only a few fundamental legal documents. Experts suggest the following:
• Will: You should create a will when you have assets or start a family. Assets can be left to loved ones through this legal document. A will usually names an executor. This person manages the administration of the estate and distributes assets to the specified inheritors. Also, the will should designate guardians for your children in the event both parents were to pass.
• Healthcare proxy: This legally permits an individual to make medical decisions on your behalf in the event that you became incapacitated. Depending on the state, family members may make some healthcare decisions if no healthcare proxy is in place. However, the legal and financial process can be very strenuous. This is why a healthcare proxy is a good idea.
• Durable power of attorney: In the event that you were to become incapacitated, this grants a spouse or another individual the power to make financial or legal decisions on your behalf.
Trusts are another estate planning tool, which give you greater control over who receives your money. Furthermore, funds in some trusts cannot be attained by creditors. There are various types of trusts, which include the following:
• A special needs trust provides for a child in need. This does not compromise his or her access to government benefits.
• A Qualified Terminable Interest Property (QTIP) trust provides for the marital deduction and guarantees that a spouse cannot use assets to benefit a future spouse.
If you are ready to make arrangements for your assets, you should speak to an attorney about the various estate planning possibilities. There are many options that you can select to ensure that your loved ones are cared for.
Source: U.S. News & World Report, “What type of estate and tax planning do I need to do?” Susan Johnston, Feb. 27, 2012