Many people think that having a will means their estate plan is complete. In reality, a will is essential, but it’s just one aspect of estate planning. A comprehensive estate plan includes tools like trusts, powers of attorney, and advance directives to protect your assets, ensure your medical and financial wishes are followed, and make things easier for your loved ones after you’re gone.
Wills
A will allows you to make bequests to individuals of your choosing and name a guardian for your minor children. Your named executor will carry out your wishes and settle the estate’s finances. The executor files the will in a Surrogate’s Court in the county where the decedent resided.
Trusts
There are two primary types of trusts: revocable and irrevocable. Both types of trusts name beneficiaries for all the account’s assets. In a revocable trust, you own and manage the assets until you die. In an irrevocable trust, you relinquish the management of your valuables to your named trustee. Irrevocable trusts lower an estate’s value, reduce state and federal estate taxes and protect the assets from creditors’ seizure.
Powers of Attorney
Estate planning is the perfect time to grant someone you trust a power of attorney to sign documents on your behalf. A general power of attorney gives someone the right to represent you in financial matters.
Advance Directives
Advance directives focus on medical care if you cannot speak for yourself. A living will records your wishes for types of life-prolonging treatments you want to deny or reject. A health proxy grants a named individual the right to make medical decisions on your behalf when you are incapacitated.
Estate planning removes doubt about your wishes and eases the transition for your loved ones. Documenting everything ahead of time allows you to discuss your plans with those closest to you and avoids family squabbles after you pass.