The idea of estate planning may feel overwhelming. For those unfamiliar with the process, it might seem needlessly complicated. You can create an estate plan easier than you think when you understand the necessary elements.
A basic estate plan includes four primary components.
A will
Your will illustrates how you want your estate and assets handled after your death. As you draft your will, you also identify your executor who will carry out your wishes. Your will also details any guardianship wishes and beneficiary designations. A will reduces the complexities of the probate process if necessary.
A trust
A trust allows you to dictate the distribution of your assets without any worry about probate issues or challenges. Placing assets into a trust transfers ownership of those assets to the trust and subsequently to the trust beneficiaries. Choose a revocable trust to add and remove assets at will or an irrevocable trust for fixed asset placement.
Power of attorney
Power of attorney is a legal assignment of authority for someone to sign and make decisions on your behalf within any established parameters.
Advance directive
An advance directive defines your medical wishes in the event of any incapacitation or inability to make your own decisions. You can appoint someone to make decisions on your behalf and detail your treatment preferences.
These four simple elements are fundamentals for a comprehensive estate plan. Planning is easier than you think when you consider each individual element and create your plan one step at a time. You can add any additional elements for your personal situation after you deal with the basics.
