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An estate plan is a way of organizing your wishes for after you pass on. It is a good idea to put these together not when you feel as though the end of your life is near, but early on. You never know when your last day may be and you want your assets divided to your liking, as well as your children being raised by who you choose. It is important to recognize all the important parts of an estate plan and we have listed seven for you to think about.
Letter of Intent
A good way to not only guide your beneficiaries or executor, but also the judge who may divide your assets, is the letter of intent. You can include instructions such as funeral preferences, asset direction or other special requests. This does not count as a legal document such as a will, but it may assist your loved ones with the many tasks that come about after your death.
Wills and Trusts
Trusts are used to cover specific assets. Generally they are used to leave behind certain items, such as property, to underage beneficiaries to claim as they grow of age. Wills, on the other hand, are much more general and larger. You should gather two witnesses to view the will, preferably people who are not beneficiaries. It is also advised to have a lawyer’s assistance with putting together the will. Wills are very important because without them, the outcome of your estate is left up to state officials.
It is best to be organized when putting together important documents such as an estate plan, and the best way to do this is to have an asset inventory. Put simply, this is a list of everything you own. These can be grouped into two different types of possessions, tangible and intangible. Tangible consists of items such as cars, collector items and houses while intangible assets usually include life insurance policies, bank accounts, 401(k) plans and more.
Lawyers, tax advisors or other professionals may prove to be expensive, but you generally get what you pay for. It is advised to confer with experts in a particular subject when putting together something important, to ensure it is the best it can be and accurate.
Power of Attorney
To avoid having a court in control of your assets and having a say over your life, it is well advised to appoint a power of attorney. This is a person who instructs where your assets go as well as maintaining your estate such as paying bills if you are medically unable to do so.
To ensure that your assets are going to the right people, make sure you are up to date on your beneficiary designations. It is a common occurrence for an ex-spouse to still get portions of an asset simply because they were previously on it and it was not properly updated. Frequently review your will or estate plan and make sure you list it to the entirety with a recipient of each item.
Your children should be your number one priority and having a direction of who would take guardianship in your passing is essential. It is recommended to choose a person who has the same ideas and views as you and would raise them similar to how you had been. Don’t let your children’s fate have to be court decided, make the decision yourself and have a lawyer document it for you.
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