In first post of the New Year, we highlighted why estate planning should be an important resolution. Essentially, estate planning can save money in the long run, help avoid confusion between grieving family members and give the person effectuating the plan some peace of mind.
Some people may believe that simply having a will can achieve all of these goals. However, wills have some limitations. This post will briefly explain how having other estate planning documents in addition to a will can help in making things easier when it comes to transferring money, assets and property.
Durable power of attorney – This enables the person of your choice to make financial and legal decisions on your behalf in the event you are incapacitated. Indeed, the stakes change when you pass away; but before that, it is helpful to have this document in place to make sure your wishes are met.
Revocable trust – This allows you to place assets in a different entity that will allow you to transfer property and assets to specified beneficiaries upon your death without them having to go through probate. The trust is facilitated by a third party (a trustee) who is responsible for managing the assets and distributing them according to rules set forth by the trust.
Health care directive – While a power of attorney helps in making legal and financial decisions, a health care directive (also known as a living will) can designate someone to make health care decisions on your behalf in the event you are incapacitated. A health care directive is critical when you have family members who may have decision-making power, but do not know how to communicate effectively.