Estate planning is important and most people know it. According to a recent Yahoo article, 56% of people believe having an estate plan is important. Unfortunately, although most people know that they should have a plan, many people fail to follow through on actually creating one. In fact, the same Yahoo article found that only 1/3 have actually put an estate plan.
One reason people don’t have a plan in place is that they do not know where to start in creating one. Yahoo provided some tips and advice on this issue. According to the article, there are three critical estate planning documents that everyone should create. Here’s what they are.
A last will and testament
Many people who create just one estate planning document opt to use a last will and testament. That’s because wills are simple and the majority of people know what they are and how they work. You can create a will pretty easily simply by deciding who you want to leave your assets to and providing instructions about your wishes. You can also address some important issues in a will, such as who should be the guardian for your minor children in the event that you pass away before the time when your kids reach adulthood.
While a will is a good tool to use, however, it is not necessarily the right way for everyone to transfer their assets to loved ones. In some cases, you are better off using different tools like a trust. A trust gives you a lot more control over what happens to your assets. For example, you could restrict what the money in the trust is used for or limit how much your heirs get at one time.
A trust can also help you to better address special situations like when you have minor children and you need to name someone to manage their inheritance until adulthood or if you have a disabled loved one and you want to transfer assets to them without the risk of causing them to lose means-tested benefits.
When you want to transfer assets outside of the probate process, protect assets from being lost if you need to go into a nursing home, or reduce the estate taxes that are charged on your estate, you may also be better off creating a trust rather than a last will and testament.
A durable power of attorney
A durable power of attorney is another estate planning tool that many people use and know about. When you make a durable power of attorney, you delegate authority to make decisions to someone you trust. You do this by naming your agent who has the ability to take action to manage your affairs for you.
You can create a healthcare power of attorney if you want to put someone in charge of making decisions about medical care if you can’t voice your opinion. You can also create a general power of attorney in order to put someone in charge of making other kinds of decisions for you.
Whatever kind of power of attorney you make, you need to ensure that you specify it is a durable power of attorney. This is vital because otherwise, the authority you granted to your chosen agent would end in the event of your incapacity. Since you usually make a power of attorney specifically to put someone in charge when you become physically or mentally unable to act on your own behalf, it would do you little good to create this document if you do not make it durable.
Of course, a power of attorney is not the only tool you can use in incapacity planning. Some people create a living trust in order to name a backup trustee who can manage their assets. However, if you want a simple and effective way to ensure you are in charge of who makes decisions for you and manages your affairs for you, a power of attorney enables you to make that happen.
An advanced healthcare directive
Finally, an advance healthcare directive is the last recommended document. This is a very important estate planning tool because it allows you to take control over your medical care. You can spare your family from making difficult life and death decisions and ensure that you get the care that you want, but avoid extraordinary measures when you don’t.
When you create a living will, you get to express your preferences on specific kinds of medical treatments. For example, you can specify whether you want to be kept alive on a ventilator or whether you want a feeding tube or other artificial nutrition to be used in order to prolong your life. You get to think about quality of life issues and make informed choices so your preferences are known at a time when you will no longer be able to speak for yourself.
An estate planning attorney can help you decide what documents you need
Krueger Hernandez & Thompson SC can offer personalized advice on the estate planning documents you need so you can ensure you are building the secure legacy that you and your loved ones deserve.
To find out more, sign up today for a comprehensive and informative seminar on estate planning topics or reach out via phone at 608-824-9540 to talk with a Middleton, WI estate planning lawyer who can help you. With the right advice and guidance about your personalized goals, you can go beyond the basics to make an estate plan that is right for you and the people you care about the most.
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