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What Are The Five Components Of Estate Planning?

What Are the Five Components of Estate Planning?

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Estate planning is a vital step in preparing for death and other unexpected events. You might know you want to leave family heirlooms, money, and other possessions to your loved ones but don’t know how to do it.

Typically, estate plans involve preparing multiple legal documents to address property distribution, incapacity, and other essential aspects of a person’s life and death. You should hire an experienced estate planning attorney to ensure you establish a comprehensive and valid estate plan.

Components of a Solid Estate Plan

You must protect your rights, family, and assets. Including the five components below when you make your estate plan will ensure that you’re covered in a broad range of scenarios.

Your Will

A common misconception about estate planning is it’s only necessary for older or wealthy people. However, everyone should have a will.

A last will and testament establishes who should receive your assets upon your death. In your will, you can appoint an executor of your estate who will be responsible for distributing your assets as you direct. Your will is a legally binding document your executor must follow to fulfill your wishes. Wills can also indicate who you would like to be the guardian of your children if they are still minors when you die.

Trusts

With a trust, you can get your assets into the hands of your beneficiaries quickly. Your will must go through probate. Not only are probate cases matters of public record, but the process can be lengthy. With a trust, your affairs are kept private, and your appointed trustee distributes your assets at the time your trust directs they do so. A trust is a good way to provide for minor children. You can make the children’s guardian the trustee and they can use the funds in the trust for the benefit of the kids. If you have a vast estate, a trust could help you reduce the tax burden for your family.

Durable Power of Attorney

Creating a durable power of attorney (POA) is an excellent idea if you have legal and financial responsibilities. You can designate an agent to handle your affairs if an injury, illness, incapacitation, or death prevents you from handling them yourself.

The agent you choose should understand your financial and legal obligations and be willing to carry out their duties according to your instructions. They should be someone you trust not to use your finances or legal documents for personal gain. They can pay your bills, make decisions based on what you would want, and manage other day-to-day tasks.

Advance Medical Directive

An Advance Medical Directive allows you to appoint someone to make medical decisions on your behalf if you become incapacitated and cannot make those decisions yourself. That person is your Health Care Agent. Once you’ve become incapacitated, your Health Care Agent makes all your medical decisions for you, including those about hospitalization and types of treatment. The person you designate can review your records, speak to your doctors, and advise them how to handle your treatment. For example, your Health Care Agent can inform your doctors of your preference for end-of-life care and whether you want extraordinary measures.

The Advance Medical Directive contains a section called a Living Will. In this portion of the document, you can specify whether you would like life-sustaining treatments in certain situations. You can also specify mental health care choices and other information you’d like your Health Care Agent to have.

Beneficiary Designations

 You must designate beneficiaries if you want anyone to receive your assets when you die. You should name beneficiaries for various assets in your estate, such as real estate. Be sure that your non-probate assets, such as life insurance policies and retirement plans, have beneficiaries listed.

Beneficiary designations aren’t a one-time thing. It’s vital to understand the importance of keeping them up to date. You should modify your estate to reflect life events. For example, if a beneficiary dies, you must update your estate plan by choosing someone else.

Contact Us

At Taylor, Taylor & Taylor, Inc., we have the experience and resources to create comprehensive and legally enforceable estate plans for our clients. We can review your circumstances and advise you about the documents you should include to protect yourself and your assets.

If you want to create or modify your estate plan, call 804-266-9619 or contact us online for a confidential consultation with an estate planning lawyer in Glen Allen, VA.

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