Pretty much everyone has heard, one way or another, about estate planning, even if they don’t call it that specific term. Whether it’s representation in popular culture (seeing a dramatic last will and testament on a TV show) or your relatives mentioning something about it at the dinner table, you’ve probably run into estate planning more than a few times. What people may not know is that this field is really broad. There are tons of different facets of estate planning, and that’s a good thing! If there weren’t, people wouldn’t get the results they wanted.
Here are some of the most commonly-forgot things about estate planning.
There are a LOT of Documents
As mentioned above, there are many different tools for an estate plan besides a will. For example, there are 529 plans, which allow you to set aside money for a kid’s college at a later date. There are also documents concerning your health, family, and financial care that come into effect while you’re living. Estate planning isn’t just a posthumous thing (though it’s definitely relevant). Here are two major documents that you’ll need while living.
Healthcare directive. You may or may not have specific concerns when it comes to your medical care and what you want done. A healthcare directive ensures that, if you are too incapacitated to tell the doctors and nurses what you want when you’re in the hospital, the directive will have your requests laid-out. It’s a way to plan ahead for every eventuality.
Power of attorney. A power of attorney helps manage your finances if you are, like with the healthcare directive, too sick or incapacitated to manage them yourself. This POA is someone you trust, who you know will do the right thing with your money.
Living Trusts Exist, Too
Living trusts are actually, in some ways, preferable to last wills and testaments because they go into effect immediately, and you can avoid probate court if you have one (which you cannot do if you just have a last will). A living trust has three parties: a trustee, a donor, and a beneficiary. You are the donor, and you grant nominal ownership of your assets to the trustee. At the time you specify (after death, for example), the trustee gives ownership to the beneficiary. You can bypass probate with this, allowing your beneficiary to get the assets immediately.
You Can Update at Any Time
Estate plans can (and should!) be updated at any time. Whether you’re updating your plan to reflect a change in your family or finances, you need to ensure that you move quickly on the updates, as you never know when your plan will need to go into effect.
It’s Really, Really Necessary
The last main point about estate planning is just how vital it is. You don’t want to be dragging your family through the time and expense of probate court, where a judge divides up your stuff without real regard to how you would have wanted it divided. Estate planning isn’t just good for your future—it’s good for your family’s.
And there you have it! These are just some of the many great aspects of estate planning. Set up a consultation today.