If you want to ensure your heirs are taken care of when you can no longer do it, you need to have a plan in place. Without it, your heirs could face big tax burdens and the courts could decide how your assets are divided.
Besides protecting your heirs, estate planning can also minimize income and gift taxes. And it can make sure that any special needs of beneficiaries are met without jeopardizing their eligibility for government benefits, such as Medicaid and SSI.
A will is a legal document that allows a person to make their final wishes known about how their property and assets are handled after their death. Wills also allow a person to name a trustee or executor that they trust to carry out their instructions.
There are many different types of wills that serve various purposes, and the type you need depends on your specific situation. Some of the most common types are simple wills, testamentary trusts and joint wills.
Wills must be written in a formal way, signed and witnessed by someone over the age of majority who is mentally capable. They are usually drafted by an estate planning attorney or other professional.
In some jurisdictions, a will can be revoked by the testator doing something to destroy or tear it (such as burning or striking out part of it), or by executing a new will that cancels all previous wills. In others, a will can be revoked only through a codicil, which is a separate document that replaces the old one without replacing it entirely.
Trusts are a very popular estate planning tool for high-net-worth individuals and families. They can avoid probate, minimize or eliminate estate taxes and provide specific instructions about how assets are distributed after the grantor’s death.
The best way to decide if a trust is right for you is to speak with an experienced estate attorney. They will assess your needs and goals to help you determine whether a trust is the best estate planning option for your situation.
There are many different types of trusts, each with its own unique nuance and purpose. The right type of trust is a crucial part of an effective estate plan.
Trusts are a very complex legal structure that requires careful attention to detail and ongoing management, so it’s important to find a trustee who can manage them well. It’s also a good idea to have your lawyer review your trust documents regularly to ensure it’s meeting all of your expectations.
Powers of Attorney
Powers of attorney are an essential part of any estate planning package. They allow a person you designate — the “agent” or “attorney-in-fact” — to act on your behalf for financial purposes when and if you become incapacitated.
As with all estate planning documents, it’s important to ensure your powers of attorney are properly drafted by an attorney experienced in Estate planning laws. Using an attorney to draw up a POA not only helps to make sure it conforms to state requirements but also to help ensure that it covers all your wishes and preferences when you can no longer communicate them.
The best way to start is by getting a power of attorney form from the state or creating one online using an easy-to-use estate planning platform like FreeWill. Once you have the forms, complete them, sign them, and have them witnessed and notarized.
Health Care Directives
Advance health care directives are a good way to make sure that your wishes about medical treatment are honored in the event that you are unable to speak for yourself. They can help you to avoid confusion and stress in the face of an illness or serious injury.
There are several types of advance directives, including a living will or instructions for health care, a power of attorney for health care and a POLST form or physicians order for life-sustaining treatment (also called a MOST). These documents can be written by yourself or with the help of an estate planning lawyer.
The laws around these types of documents vary from state to state. Each jurisdiction has specific requirements for executing these forms and a few require witnesses or other formalities. You may also need to execute a new form when you change your wishes or revoke an existing document. In addition, some states maintain advance directive registries that can be used to identify your preferences about medical treatment.