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Although it’s time-consuming and may feel uncomfortable to make financial and long-term care decisions, it’s more problematic when these decisions are never made. Estate planning is one arrangement that your family should consider making, to avoid family fights, legal fees or government possession later on – and it doesn’t have to be difficult. Learn about these simple steps for estate planning to ensure that you and your loved ones make sound financial decisions.
BENEFITS OF ESTATE PLANNING
Estate planning is an arrangement where assets are transferred to loved ones following a death. Some of the benefits of estate planning include using a last will and testament to specify gifts for family members and loved ones after your death. However, if arrangements are not made, the government can decide what happens to an estate, one’s possessions, property and money. This is why estate planning is so crucial and important for a family.
TOP ESTATE PLANNING DOCUMENTS TO CREATE
In addition to a last will and testament, a power of attorney and health care directive should also be created. These two documents communicate wishes regarding one’s financial and healthcare decisions.
1. Power of Attorney: This gives another party the legal authority to act on one’s behalf in order to manage legal and financial affairs when a loved one no longer can. Power can be designated to be very broad to allow complete control or limited to a specific task.
2. Health Care Directive: This specifies a choice for medical treatment when one is no longer able to communicate or provide consent. It also allows for someone to be designated to make health care decisions when an individual is no longer able to do so.
STEPS TO CREATING A LAST WILL AND TESTAMENT
When creating a last will and testament for a loved one, be aware that you will need to follow these important steps:
- Appoint an Executor for the Will
An executor will administer the estate and is responsible for collecting the assets of the estate, paying any debts of the estate, paying state and federal taxes and then distributing the assets of the estate in accordance with the direction of a will. When selecting an executor, ensure that this person can be trusted and will be able to handle financial matters prudently.
- Update the Will
In order to maintain a valid will, your will should be updated when certain events happen. Use a Codicil if you change your executor, guardian or you’ve made simple changes to your last will.
- Create a New Will
Get married or divorced. Need to add or remove a beneficiary. Already have one or more codicils attached.
PUTTING A LAST WILL & TESTAMENT INTO ACTION
When a loved one has passed it can be a difficult time, however with their Last Will and Testament in order it is one less thing to worry about.
To put a Last Will and Testament in action the executor must file it at the probate court. The probate process includes ensuring that the will is valid, paying off any outstanding debts, identifying property and handing out inheritance to the heirs.