Essential Documents Needed to Set Up an Estate Plan , Estate planning is something that one needs to do yet isn't such a welcoming thought for most people. Sickness, disease and death are topics that most people don't like to discuss yet these are incidents that hold great significance in our existence as human beings. An estate plan is like a problem that people hate to deal with. It's there and one needs to do it, but most people simply put it off for a while, with the thought that maybe they can do it much later when everything's too late. However, with a rock solid estate plan, you not only give your family a secure future and less of a hassle, but most importantly give yourself a helping hand in the event of disability and incompetence. It's like overseeing your affairs even when you're no longer around or are physically or mentally impaired to handle your estate.
You may have heard of stories about family squabbles over the death of a relative who did not leave behind a last will and testament. You may have also heard of very expensive tax bills that one needs to pay when claiming the properties of a departed loved one. All of these things can be avoided with proper estate planning. Here are 5 essential documents needed in setting up a good estate plan.
1. Last Will and Testament- This is perhaps the very basic and most important document of a good estate plan. The will contains the names of your beneficiaries or the names of the people who will be taking over your assets in the event of death. You decide who gets what in the will. Without a will, the state decides who gets your assets. Apart from the smooth transition of your assets, you can also assign the guardians for your children as well as many other clauses and stipulations. A will must be drafted by a trusted and competent attorney.
2. Living Trust - This is very much like a will, as a living trust also aims for the smooth transition of your assets to their beneficiaries. While a will is a public document, a living trust is not. A living trust will therefore be not subject to expensive and stressful probate hearings. Many celebrities and high-profile individuals prefer a living trust over a will as this document is private; thus, assets are transferred with utmost confidentiality. However, a living trust is also more costly to maintain. It is important that a living trust be properly funded so no problems will arise upon the death of a trustee.
3. Living Will- This document contains your wishes on what must be done in the event of being critically ill. For example, a living will may stress that you be well taken care of on your last days. It may also include your preference on being attached to machines in the event of comma and how long you want to be attached to such machines.
4. Special Power of Attorney - This document lets you appoint a person who will take charge of your assets when you are incapacitated. This document should come in handy when you will need to sign checks or papers but couldn't anymore. Somebody you greatly trust must therefore be appointed. A spouse, child or close relative is usually assigned. Without a special power of attorney, the family may need to get this document from court which can be time-consuming, expensive and highly stressful.
5. Health Care Directive - While a special power of attorney allows you to assign someone to manage your assets, the health care directive lets you appoint someone to make health care decisions for you. This can be the same person whom you appointed for the special power of attorney document. Whoever you assign must exercise good judgment in case you are incapable of making your own decisions.
It is very important to consult with a lawyer that you completely trust in estate and financial planning. An estate plan is a big deal and is something that you cannot do alone. You need the help of an attorney to draft the above documents and also discuss matters with your spouse and children. Sure it may need a lot of work and thinking, but estate planning is definitely worth it. Your loved ones are secure and everything goes according to how you want it to. It's like having your arm around your loved ones in the event of your passing.
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