1. The Value of Proper Estate Planning
Many individuals do not consider proper estate planning as a viable option because they believe that their net worth is not high enough or they do not have sufficient property or assets to merit consideration of going through the process. The fact of the matter is that proper estate planning is a tool for everyone, which allows individuals to organize their financial affairs to simplify the transition of property and assets to surviving family members when the time comes. Regardless of the size of an individual’s estate, there is an estate planning instrument available that will ensure a smooth transfer of an individual’s assets in the intended manner predetermined by the estate holder.
Estate planning is a vital function because it details the exact manner in which an individual decides to have their estate dispersed. If there are no preset estate plans, any and all property or assets are subject to probate and disbursement at the hands of an appointed individual who has no prior knowledge of the estate holder's wishes.
Even if an estate holder has very few assets to disperse to their family, there are very simple tools that can be utilized with very little effort to ensure surviving family members are not required to struggle with legal obstacles and hurdles while dealing with the grief of losing a loved one. Estate planning is an easy way to provide peace of mind to both an individual and surviving heirs, but there are different estate planning tools that offer different features and benefits to various individuals depending on their circumstances, including:
- a last will and testament;
- a living trust;
- a living will; and
- a power of attorney.
2. Last Will and Testament
A last will and testament is a legal document that allows an individual to determine who the beneficiaries of their estate will be and exactly what assets they each will receive. The most notable aspect of a last will is that it designates an executor, who is usually a trusted individual, to oversee the implementation of the will and the division of the estate.
The will maker predetermines the method in which their estate will be dispersed, which effectively minimizes chances that any of their property or assets will need to be administered by a probate court. A last will and testament is an effective estate planning solution for individuals whose asset value falls below the threshold limit of estate taxes. If an estate’s net worth is higher, there are more effective solutions available.
3. Living Trust
For individuals who have substantial property and assets and require an estate planning instrument that offers the highest level of assurances that their estate will not be subject to probate court, a living trust is the best solution. A living trust is a legal arrangement where an individual transfers their property and assets into the trust and names a beneficiary to inherit those assets when the trust maker dies. While still alive, the trust maker has access to all property and assets and maintains control over the trust.
Upon the trust maker’s death, a predetermined trustee then administers the living trust according to the wishes of the trust maker. The beneficiary receives the assets and property in a predetermined manner established by the trust maker and overseen by the appointed trustee. The living trust effectively eliminates any chance of property or assets winding up in probate proceedings, which can save beneficiaries substantial amounts of time and money as well as aggravation.
4. Living Will
A frequently overlooked element of estate planning is providing instructions for loved ones should an individual become incapacitated in any manner that prevents them from making their own healthcare decisions. A living will provides family members and medical professionals with a predetermined list of directives the individual wishes to have followed should they become incapacitated and unable to make decisions. Specific directives of a living will can include whether or not the individual wishes to remain on life support or whether or not certain emergency life-saving methods or drugs should be used to sustain life.
Living wills can be as basic or as complex as an individual wishes, and can specifically address life-prolonging medical care if there is a possibility of recovery as well as palliative care to administer pain relieving drugs during the process. It can preclude any forms of medical care the individual wishes to avoid, such as:
- cardiopulmonary resuscitation; and
- diagnostic tests.
Many people use a durable power of attorney in tandem with a living will to provide a trusted individual to ensure the living will is adhered to.
5. Power of Attorney
Another consideration of detailed estate planning is appointing a trusted individual to act as a financial power of attorney to act on an individual’s behalf should they become temporarily incapacitated. A financial power of attorney can be set up to spring into effect only if the individual is deemed medically unable to make their own financial decisions and manage their day-to-day affairs. When incapacitation occurs, the financial power of attorney takes over the daily functions of an estate until the individual fully recovers and can act on their own behalf. This can help ensure a seamless oversight of an individual’s estate during a stressful time.
Proper estate planning is inclusive of everything an individual needs to predetermine in the event of death or incapacitation. Regardless of the size of an individual’s estate or net worth, ensuring a seamless transition of property and assets to loved ones is vital during a time of stress and grief that takes its own toll on a family. When family members do not have to worry about possibly winding up in probate court or dealing with the details of how an estate is to be dispersed, it offers them a considerable measure of relief during a very trying time.
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