There’s a lot that you can do with an estate plan. For starters, it can help anticipate what happens to your assets after you pass away.
There are a few documents that you should be aware of when making an estate plan. Here’s what you should know:
1. Your will
The most basic document of an estate plan is your will. A will helps determine who handles your estate and who inherits from you. The absence of a will when someone dies is called dying “intestate,” and that means the state would determine who distributes and benefits from your estate.
2. Your heirs
The people who benefit from your estate are called beneficiaries or heirs. People typically name family members, siblings, spouses and children as heirs — but it could also include friends and charities or worthy causes.
3. The executor of the estate
Your will also will name an executor of the estate, who is the representative in charge of distributing assets. They’ll have to collect death certificates, pay any taxes and contact your heirs, as well as attend to the estate as it moves through probate.
4. Powers of attorney
If you were in an accident or developed a medical condition that made you incapacitated, then you would need a representative to handle your affairs. You can name a power of attorney to make financial and medical decisions on your behalf.
5. A guardian for your minor children
If you have children, then you may wish to name a guardian to step in if something happens to you and their other parent. A child guardian would have many of the same rights that you would as a parent, so that means that you need to consider this issue very carefully.
6. A trust
A trust is a lot like a will and helps distribute assets. But, it works by putting assets in the trust of a trustee. The trustee will then distribute assets according to your wishes. Trusts help avoid estate taxes and probate in ways that an ordinary will cannot.
An estate plan can be complicated to put together. Experienced legal guidance can help you get the estate plan that best meets your goals.