Does Your Estate Plan Have All The Needed Pieces?
According to a recent poll, only 46 percent of adults in the United States have a will. Even fewer have comprehensive estate plans. A last will and testament is the fundamental estate planning instrument. Through a will, you can specify who will receive your assets, personal possessions, and real estate after you pass away. You can also name a guardian for your minor children in the event that you and the other parent pass away before the children are adults.
Without a valid will, state law determines how your property is distributed and who should become the guardian of your children. Furthermore, when someone dies without a will, their surviving loved ones are often left guessing how to handle their final affairs. This can exacerbate the stress of an already difficult situation.
Having a will is crucial, however, a will is not the only estate planning tool available to you. Beyond a last will and testament, there are other documents that you may need in order to ensure that your final wishes are carried out properly.
Estate Planning Above and Beyond a Will
A will is essential, but there are other aspects to estate planning. As you explore your estate planning options make sure to consider the benefits of utilizing additional estate planning instruments such as:
- Trusts – A trust is a legal document that allows you to transfer assets and property to another party for the benefit of another. Trusts can be used for wealth preservation, tax savings, and to avoid probate. The main two classifications of trusts are irrevocable trusts and revocable trusts. A revocable trust may be modified at any time, making it a popular option. Irrevocable trusts cannot be modified. However, irrevocable trusts offer increased asset protection compared to revocable trusts. Because assets are held by the trust and not the grantor, the assets are shielded from creditors and lawsuits.
- Power of Attorney – A power of attorney grants another person the legal authority to act on your behalf. There are several types of power of attorney. A general POA gives another individual the same decision-making authority as the principal. A durable POA gives another person authority to act on an incapacitated person’s behalf. A limited POA grants limited authority for specific tasks.
- Beneficiary Designations – Retirement account assets such as a 401(k) or IRA and insurance plans can be passed to loved ones without a will by designating beneficiaries. Make sure your accounts have a beneficiary and a contingent beneficiary. If the primary beneficiary passes away before receiving the assets, the contingent beneficiary will receive the assets.
- Living Will – Have you ever thought about what types of medical care you would want if you were in a vegetative state or fell gravely ill? A living will is a document that states your wishes regarding end-of-life medical treatments if you become incapacitated. For example, you can specify whether you would want to be put on a feeding tube or ventilator, or receive cardiopulmonary resuscitation (CPR) if you were terminally ill.
- Letters of Intent – You can use a letter of intent to describe your wishes regarding asset funeral services and other special requests. A letter of intent can help you clarify your final wishes and provide your executor with more specific guidance.
The types of estate planning tools that a person will want to utilize vary depending on his or her unique situation and needs. For example, a mother of a disabled son may use a special needs trust to provide assets to her son without reducing his chances of receiving government benefits. A man suffering from cancer may want to set up a power of attorney that gives his wife permission to make medical decisions on his behalf and handle his financial obligations should he become too sick to manage these affairs himself.
Call Us for Help
Determining which estate planning options are right for you can seem overwhelming, but you do not need to figure everything out on your own. The Naperville estate planning attorneys at the Gierach Law Firm can evaluate your needs and objectives and help you develop an estate plan that works for you. Call our office at 630-756-1160 for a confidential consultation.
Please note: These blogs have been created over a period of time and laws and information can change. For the most current information on a topic you are interested in please seek proper legal counsel.