An estate plan is crucial to managing your asset-base upon death the way you desire… so the courts do not do it for you.
What is an Estate Plan?
An estate plan is a series of documents and arrangements that specify how your assets would be handled and distributed should you pass away or become incapacitated. Establishing a complete estate plan ensures your final wishes are followed properly. To do so, you will need three key documents: a will, a medical power of attorney, and a financial power of attorney.
What you need to start your Estate Plan
While a will and power of attorney have their own specific functions and benefits, a proper estate plan includes all documents.
A will, called a last will and testament, ensures your assets and affairs are handled exactly how you want them after your death. A will lays out memorial requests, designates assets to beneficiaries, and appoints a fiduciary (personal representative). It also states how assets will be handled if you pass away. For example, if you have children under age 18, a will appoints a guardian over them or assets left to them. Without this document, the court will appoint a guardian. A will also handles the remainder or residuary of the estate.
Unlike a will, which only goes into effect after an individual has passed, powers of attorney goes into effect when an individual is still alive but unable to handle their affairs (incapacitated). Powers of Attorney (POA) is a document that allows another individual to stand in your shoes and make decisions for you that you would otherwise make yourself. This could look like a variety of things, from handling mortgage payments to making medical decisions.
Establishing this document will ensure your life decisions are in the hands of someone you trust. Furthermore, there are two specific types of powers of attorney that complete your estate plan: medical and financial. The functions of these documents are fairly self explanatory. A medical power of attorney grants an appointed individual the ability to make medical decisions on your behalf, while a financial POA is drafted strictly for financial decisions.
Both a will and powers of attorney are crucial to protect yourself and your assets in the event you pass away or become incapacitated. Together, these documents will prevent your loved ones from a lengthy legal process known as probate.
A proper estate plan also helps you avoid probate. Probate is the court settlement of an estate after an individual has passed. Many try to avoid probate as it is a long and tedious process. Intestate probate occurs when an individual dies without a will. Testate probate takes place when an individual dies with a will but needs letters testamentary (a court issued document) to transfer certain assets or property. Both aren’t preferable, but intestate probate is the primary type to avoid. Intestate probate can result in court procedures that last anywhere from nine months to three years. Additionally, it is five to ten times more expensive than an estate plan. Thankfully, you can avoid intestate probate with a proper estate plan.
It’s crucial to ensure your assets and property are handled exactly how you want after you pass away. Creating an estate plan saves your family time and money from long court procedure and difficult decisions.
How We Can Help
Baxter Legal Services can aid you in creating a plan for an effortless transition of assets to your designated beneficiaries. We will help you decide who will inherit your assets, who will handle your financial affairs if you are incapacitated, and who you want to make medical decisions for you if you are unable to make them for yourself. Creating a sound estate plan is a demonstration of a responsible and thoughtful legacy that will be appreciated by your loved ones. Contact us today to get started on your estate plan.
Interested in other topics on estate planning? Check out our blog, where we post information on lifetime gifts, estate planning for a second marriage, divorce, and more.