Nearly everyone has an estate. Everyone owns something, whether a car, home, real estate, life insurance, investments, savings accounts, businesses, furniture, and other personal possessions. No matter the size or type of property, you have an estate. It is, therefore, important to learn about what estate planning is and how it works. The planning can seem daunting, but it is an essential consideration that can prevent many conflicts in the future. This can help you make informed decisions in the long run.
What Is Estate Planning?
Estate planning involves designating and establishing who will receive your assets in the future in the event of your death or incapacitation. In short, you want your estate to be handed over to the beneficiary in the future. It is an easy way of managing and transferring your estate after your death through a will, trust, or insurance policies, among other elements. Estate planning may involve a lawyer, accountant, financial planner, professional advisor, banker, broker, and life insurance advisor who understands your assets’ nitty-gritty, goals, and concerns.
Components of Estate Planning
The estate planning process requires expertise and experience because multiple vital components are included. Here are the components of estate planning.
Wills and Trusts
Estate planning begins with wills. This is the primary part of an estate plan whether you are wealthy or of modest means. A will lets you decide which beneficiary receives your property when you die based on your wishes. On the other hand, a trust enables you to transfer ownership of your assets and property to your estate plan. The trustee transfers your property after your death based on your wishes. The difference between a will and a trust is that property doesn’t need to go through the probate process during the property transfer to the beneficiaries.
Powers of Attorney
Many people have bills to manage, sign documents, manage bank accounts and perform other essential tasks related to financial and legal responsibilities. Should you become incapacitated to perform those tasks, everything may stall, and your responsibilities won’t be met. A power of attorney allows you to name a trusted individual to manage the tasks if you can no longer do so
Healthcare Power of Attorney
An estate plan may also include information about your life and health. A medical power of attorney can authorize a trusted individual who can decide your medical care when you become incapacitated. Adding a living will to the estate plan can also give information about what should happen to you if there is no chance of recovery.
An estate plan also includes beneficiary designations that allow you to transfer your assets to individuals who are the beneficiaries. It is important to ensure that your beneficiary designations are up to date depending on which individual you include in the estate. This means you should keep reviewing the designations periodically.
Who Needs an Estate Plan?
Estate planning is for everyone. While you may want to convince yourself that estate planning is not for you, the truth is that you are part of it. Everyone would be better off if they were serious about planning for the future. It is not about having accumulated wealth or attaining a certain age, nor do you need to have a specific amount in your bank accounts to have an estate plan. Anyone above 18 years should consider creating a plan even if they do not have a lot of assets.
Estate Planning Will Help You Stay Organized and Give You Peace of Mind
Estate planning can be complicated, challenging, and time-consuming if you lack the knowledge and expertise. In this case, you should hire a professional to help you. Roberts Tax and Retirement Planning is an experienced retirement and tax planning service provider that can help you plan your property for the future. This will give you peace of mind knowing that the financial state of your family is secure for the future. Contact us today for a free consultation.