Many people prepare for their passing far in advance by making an estate plan. An estate plan can help dictate what happens to the testator’s estate after they pass away.
There’s a lot to include in an estate plan. Here’s what you should know:
1. Will
A will is the most basic form of an estate plan. There are several types of wills. In a simple will, the testator outlines their assets and how they’ll be distributed. A joint will is made with another and is often used by couples to name the other as a beneficiary. While a pour-over will transfers the testator’s assets into a trust.
2. Trust
A will has a few disadvantages. For example, they may take estate taxes from beneficiaries, beneficiaries have to wait for probate to see any inheritance and a will can be contested. To avoid these issues, people make trusts, which puts assets in the hands of a trustee to distribute to beneficiaries. Furthermore, a trust can include clauses that dictate how beneficiaries inherit assets.
3. Choosing an executor
When the testator passes away, the estate is handled by the executor of the estate. The executor’s job is, in short, to distribute the estate. Before that can be done, the executor must do things like collect death certificates, validate the will, pay the testator’s taxes and contact interested parties.
4. Powers of attorney
Simply put, a power of attorney is a representative who acts on behalf of the testator. The power of attorney may handle the testator’s financial and medical matters. The testator is typically incapacitated when this happens, although some limited POAs are useful in other situations.
5. Child guardian
If a testator dies and leaves their children unparented, a designated child guardian could step in. A child guardian would have many of the rights and responsibilities that the children’s parents would.
Making an estate plan can be complicated. With legal help, you can make sure that your estate plan actually meets your needs and goals.