It’s almost the Fourth of July! Fireworks, steamy barbecues, pool parties and tons of fun are on the table! But, before you start lighting things on fire — especially in the evening, after having treated yourself the entire day to way too many mimosas, margaritas, or beers … — make sure your assets are protected. And we don’t just mean limbs, noses and other precious bodily parts. We mean estate planning. Summer in general is a good time to take care of stuff you might have been too busy to look at during the rest of the year, and reviewing and updating your documents to ensure your assets are protected is never a bad idea.
Here are some major estate planning tools that you can use to keep your assets safe:
A living trust is a three-party fiduciary relationship. You are the donor. The person you’re ultimately giving your assets to is the beneficiary, and the third party is known as a trustee. You give nominal title of the assets to your trustee, who then confers the property to the beneficiary at a set time. The living trust is effective immediately and it can be revocable or irrevocable, depending on what you want.
The reason a living trust is such a powerful way to protect your assets is because it allows you to avoid probate court. Your assets will go directly to the desired recipient. They won’t be taken through court and possibly diverted to pay off debts.
Power of Attorney
The power of attorney is a person you choose. This trusted individual will take care of your finances in the event that you become too sick or incapacitated to take care of them yourself. The POA handles important decisions for you regarding your assets, and he or she handles them during a very vulnerable time in your life. For that reason, you should give a lot of thought to the person you choose, as they will be protecting your assets when you aren’t able to do so yourself.
The living will is similar to a POA in that it takes place when you’re too sick or incapacitated to make your own decisions. The living will is a directive that tells hospitals and doctors what you want done in terms of medical decisions. When you can’t take charge of your own healthcare in the moment, there will still be a way for you to have a say in what happens to you.
Estate planning is particularly important for business owners. Business owners should have a succession plan in their estate planning toolkit or a directive on the sale of the business after they pass away. Updating partnership agreements and reviewing documents pertaining to the life of the business after you, the owner, dies is vital to ensuring the growth of the business and financial wellbeing of your family.
If something happens to you and you have minor children, who will be their guardian? Guardianship is an important tool to have in your estate plan because it gives you peace of mind that your children will be taken care of even if you’re not around. Having guardianship documents is always a good idea for anyone with minor children.
These are just some of the many ways you can protect your assets. So, before you start lighting fireworks and firing up the grill, make sure that you have taken care of your estate planning needs. After that, Happy Fourth!