Today, estate planning has also become commonplace for singles and couples with more modest estates who simply want to insure their possessions and finances are transferred to people of their choosing.
Estate plans may contain several different pieces, each of which can be created and carried out by professional attorneys.
The first part of an estate plan is usually a will. This document clearly defines how your assets are to be distributed in the event of your death.
Remember that assets are more than just money in a savings account – the distribution of stocks, bonds, real estate and other possessions are also accounted for in a will.
You may want to consider having a trust created by your attorney. Often drafted as part of the will itself, a trust allows you to place conditions on how your assets will be distributed when you die.
Decisions regarding the administration of an estate may be left for courts to determine when someone dies without a will. The estate is administered under the laws of intestacy but family and friends may be caused to hire lawyers to challenge the means by which possessions and holdings are distributed. This process can be very costly and create added stress during an already unhappy time.
Another part of the estate plan is a health care proxy; it’s also known as a medical power of attorney.
This legal document, prepared by a lawyer, clearly states your wishes in the case you are incapacitated and cannot make your own decisions with regard to your health care.
For example, a stroke leaves you speechless and partially paralyzed. The person named as your medical power of attorney can make decisions about your care and where you should be taken for continued medical treatment.
You will also need to create a general power of attorney as part of your estate plan. This action grants a spouse, family member, or close friend the authority to act on your behalf in private, business, and legal affairs. It can be effective upon signing or conditioned upon physicians certifying you are disabled and unable to make your own decisions.
Finally, an Advance Medical Directive (formerly known as a living will) should be prepared as part of the estate planning process. The Advance Medical Directive provides specific written instructions to the doctors as to your medical treatment in the event you are very ill and death is imminent, you are in what has been determined to be an irreversible coma condition or you have an illness or disease whereby your condition continues to deteriorate without an expectation of recovery.
Estate planning isn’t just for the elderly or the wealthy. Creating an estate plan provides you with peace of mind and ensures that everything you currently own is distributed how you wish.
In addition to having a lawyer create your estate plan, it’s a good idea to include other advisors like your CPA or broker, so all of the possibilities are covered.