New Year’s Resolution? How About Creating an Estate Plan
As the calendar flips to 2022, you might be planning some New Year’s resolutions. Whether those include going to the gym more, eating healthier or finally purchasing the dream car you’ve always wanted, there is another great resolution to add to your list: creating an estate plan.
Why is Estate Planning Important?
While perhaps you are vaguely familiar with estate planning, you may be asking yourself: Why exactly is estate planning important?
Estate planning is very important considering that the process will determine who receives your assets upon your passing. An estate plan will also address topics such as who you want to care for your minor children if you are to pass away before they are 18 years old, and who you want to make your medical and financial decisions for you if/when you become unable to do so for yourself.
When is the Proper Time to Create an Estate Plan?
It is a common misconception that creating an estate plan is only for elders. In actuality, any time in your adult life is a good time to create an estate plan.
An important thing to keep in mind is that even when you initially create your estate plan, it is important to keep it up to date due to changing laws and various life events. Examples of such life events include:
- Purchasing a new home
- The birth of a child
- Marriage
- Divorce
- The passing of a family member
- When you inherit anything
Do not make the mistake of thinking that creating an estate plan is only for elders. Having a plan in place can go a long way in helping your loved ones if you should unexpectedly pass away.
What are the Components of an Estate Plan?
While estate planning can be quite complicated, it does not need to be. We are here to help you create or update your estate plan.
Estate plans typically include the following:
- Will
- Trust
- Guardianship
- Financial Power of Attorney
- Durable Power of Attorney
- Living Will/Medical Power of Attorney
What is a Will?
A will is a legal document that declares your intentions regarding who will receive your property and any other assets following your death.
What is a Trust?
A trust is an agreement that allows one to give rights to hold assets and property to a party on behalf of the eventual recipient of the assets and property. For example, the trustor may give rights to assets or property to the trustee who will then distribute it to a current minor upon their becoming an adult.
What is Guardianship?
Guardianship decides who you will want to take care of your dependents following your death or other event that leaves you without the ability to care for those dependents.
What is the Financial Power of Attorney?
The Financial Power of Attorney gives someone you select the authority to handle your financial matters in the event you become no longer able to do so yourself.
What is Durable Power of Attorney?
The Durable Power of Attorney will give someone the authority to handle any of your non-medical related affairs.
What is a Living Will/Power of Attorney?
A Living Will declares your intentions as it relates to medical care. An example of this is if you want to remain on life support should you find yourself in that situation. The Medical Power of Attorney gives authority to someone to handle your healthcare decisions if you become unable to do so. These two documents are often combined in a document called an Advanced Healthcare Directive.
For more information about estate planning, check out our informative webinar series.
While many New Year’s resolutions do not come to fruition, make sure that your goal to create an estate plan does. Even if you do not have many assets to pass down, having an estate plan is key in making sure those assets end up with the proper people. If you do not currently have an estate plan, remember, it is never a bad time to create one.
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