Estate Planning 101: What You Need to Know About Determining the Fate of Your Assets

Estate planning involves determining what you want people to do with your assets when you die. While estate planning is critical for very wealthy people to minimize tax consequences, it is perhaps even more important for people with smaller estates. You want to ensure that your assets go where you intend, and if you fail to properly estate plan that will not occur. Instead, state laws will determine the distribution.

For simple estates, it may be possible to handle aspects of estate planning yourself. You may be able to create your own will, living will, living trust, and power of attorney. For more complicated estates, it is a good idea to consult with an estate planning attorney to ensure that everything is done correctly.

Not surprisingly, estate planning is more of a priority for the elderly or people who are ill. However, it is a better idea to tackle estate planning before you think you will need it. It is especially important for unmarried partners, who may have no legal rights to each other’s estate upon death. People who are facing potential lawsuits may also want to use estate planning to protect their assets from judgments.

Estates may be the best-known way to distribute assets upon death. However, wills are not necessarily the best way to transmit that property. Living trusts are a way to avoid probate, at least for some of your assets. While living trusts are not the right tool for all people, they can save your family time and money by avoiding the probate process.

Estate planning also involves looking after yourself in the event of disability. An attorney can help you craft a living will and a medical power of attorney. A living will outline what type of life-saving care you find acceptable, so that healthcare professionals can observe your wishes, even if you are unable to communicate them. You can also designate a medical power of attorney. They make medical decisions when you are unable to do so.

As people age, they may find handling their finances overwhelming. A power of attorney gives someone permission to make financial decisions and handle your finances on your behalf. These can be durable or temporary. For example, some people designate a revocable power of attorney when they leave the country so that someone stateside can handle their financial affairs.