A solid estate plan protects your assets, but it also allows you to care for your family financially even after you are gone. That is why proper planning is so important, as it ensures your loved ones receive your assets in the manner you desire.
Accordingly, most estate plans require multiple documents to offer comprehensive protection. Here are a few essential documents and how they work.
A will is often the cornerstone of the estate planning process. These documents list assets and provide instructions on who should receive them. A will must comply with certain laws to be legally binding. Wills also go through probate court, which is the process of proving that a will is valid, so that heirs can receive the assets listed within the document.
In addition to wills, trusts can also benefit estate planners. Assets placed into a trust bypass probate, which makes for a more efficient process after a person dies. Trusts also allow the creator to stipulate special rules, such as when and how heirs receive assets. While creators can change a revocable trust during their lifetimes, it is not usually possible to change an irrevocable trust.
Powers of attorney
A power of attorney can actually benefit you while you are still alive. In the event you become incapacitated by illness or injury, a power of attorney gives another person the authority to make decisions on your behalf. They can apply to financial decisions, such as paying bills or selling property, as well as legal decisions. While some powers of attorney are permanent, others are only active on a temporary basis.
No matter your age or financial status, you can benefit from the above estate planning tools. You should also update your entire estate plan as needed to ensure it continues to meet your needs.