Your estate planning should accomplish three purposes: protect yourself; protect your family; and give you peace of mind. How you do that varies, so we’ve given you some fundamentals to get started.
Estate planning is more than just a will, since you should plan for possible incapacity as well as death. You at least need to do this:
- Prepare a will, naming who, after your death, will administer your estate to gather your assets, pay your bills, and distribute what’s left to the people you name.
- Have a financial power of attorney, naming someone to make financial decisions for you during your lifetime in case you become incapacitated due to illness, disease or accident, and to give that person the powers they will need to make sure that you are properly cared for and your assets can be used for your benefit and the benefit of your loved ones.
- Give medical instructions, and name an agent for health care through a Health Care Power of Attorney and Living Will.
Beyond these basics, many people (but not everyone) should to consider Living Trust planning if their objectives include avoiding the expense, delays and red tape of a court supervised probate estate administration. Different types of trusts may be appropriate to accomplish particular objectives, such as preserving assets against future long-term care costs and Alzheimer’s expenses (through long-term health care estate planning), or protecting assets for beneficiaries who aren’t good at managing money or have divorce, creditor or lawsuit worries, or to build wealth (through grandchildren’s trusts, or IRA Beneficiary Trusts).
Knowing typical estate planning terms and basic concepts and reasons for particular types of planning can help you to understand what will be the right plan for you.