Not everyone fully understands the importance of an estate plan. They may assume that the only legal document they need is a will.
In reality, an estate plan is much more comprehensive. Not only does it cover the distribution of your assets after you die, but it also covers their management while you’re still alive. Your estate plan is tailored to your specific needs, but there are vital legal documents that should be included in every plan.
1. A will
We already mentioned that your will is essential to estate planning. With a will, you can name an executor to oversee the probate process and carry out your wishes. Additionally, you can designate a guardian for any minor children, disabled adult dependents or pets.
Without a will, the state of Virginia will decide how your estate is handled, and it may not be the way you wish.
2. Power of attorney
You will need someone to make financial or legal decisions on your behalf if you become incapacitated. A power of attorney (POA) authorizes a trusted individual to act on your behalf to handle matters such as paying bills and managing bank accounts.
3. Advance directives
People have strong opinions on life-saving measures and don’t want to live hooked up to ventilators and feeding tubes. Your advance directives ensure that your medical wishes are conveyed if you are unable to communicate them. You can also choose someone as a healthcare proxy to make medical decisions for you if you’re incapacitated.
4. Beneficiary designations
There are certain assets, such as retirement investments, bank accounts and life insurance policies, that allow you to name beneficiaries. These designations enable those particular assets to pass directly to them without the need for probate.
5. Trusts
Not everyone necessarily needs a trust; however, it can be a powerful tool depending on your estate planning goals. A trust allows you to specify how and when your assets are distributed. Trusts can also offer tax advantages because assets placed in the trust are removed from your taxable estate.
Crafting an estate plan is a complex process, and you will want the help of a legal professional. They can ensure your plan is legally sound and meets all of your goals.