Estate planning should be carried out long before the demise of a person. An estate plan contains all the documents necessary for the distribution and care of assets and people associated with a client. There are several crucial elements to a good estate plan. Here is a quick rundown of these elements. Contact an estate management advisor if you are planning on formalizing your asset distribution.
Power of Attorney
It is not always possible for somebody to handle their assets with a sound mind as they approach their death. For this reason, estate management clients need to nominate people to have power of attorney over said assets should they be unable to control them properly themselves. Nominating a person or institution for power of attorney can reduce the amount of complicated legal proceedings needed to distribute assets when a person is unable to control them with a sound mind.
Will/Trust
The will is probably the most well-known aspect of estate planning. It is often the document that makes the biggest difference to a client’s descendants financially. Estate planning advisors have an important role to play in the creation of legally binding will and trust documentation.
A will or trust document details how a client wishes to distribute their wealth and assets after their demise. To be legally binding in the United States of America, a will must be witnessed by two people. Most states require that a will be signed by a client when they are demonstrably sound of mind, to avoid the possibility of exploitation.
Trust agreements differ from wills in several ways. They grant a person or institution the right to manage assets for a specific purpose. Many wealthy people set up trusts, so that their children can attend university or purchase a home. In some states, trusts are exempt from certain taxes.
Beneficiary Designations
Some assets – such as life insurance payouts – can be passed on to other people without being explicitly mentioned in a will or trust. For assets such as these, it is important to designate clear beneficiaries, so that they do not pass on to the wrong people. An estate management advisor will be able to run through all the assets that are not named in a will, assigning beneficiaries for each one.
Letter of Intent
A letter of intent is usually submitted alongside will and trust documents. Its purpose is to clearly state a person’s intentions with the assets that they own after they die. Different letters of intent may be addressed to different beneficiaries that detail their unique entitlements. If a will is deemed invalid for some reason, a judge will take the letter of intent into account when deciding how to distribute assets.
Guardianship Designations
If a client has minor children, grandchildren, or people with disabilities under their care, then they will need to designate guardians for them. When a client passes away, their dependents’ care will then pass into the responsibility of these designated guardians within the document.