Estate planning is the best way to ensure your assets get to your loved ones should you pass away. However, there is much more to the process than this.
Different estate planning tools carry out various functions after you pass away and while you are still here. Here are some valuable estate planning tools to consider.
A Will
Most people have a rough idea of what a will does. It allows the testator to write down precise instructions in terms of how assets should be distributed upon their passing. A will can also provide further instructions not related to assets. For example, you can name a guardian in your will. This is an individual who takes on the responsibility of raising your minor children should something happen to you.
Trusts
Trusts are another legal tool involving the management of assets according to precise instructions. However, trusts can be a little more flexible than a will and they can also avoid probate and reduce estate taxes in some cases.
For example, if you want to ensure that your child has funds to go to college, whatever happens, you can set this up in a trust. You can draft the trust to release funds when your child has been accepted into college and needs to pay the fees.
Power of Attorney
A power of attorney (POA) is a legal document that allows you to nominate an agent to take certain actions on your behalf. For example, you can name a healthcare power of attorney to make medical decisions on your behalf should you become incapacitated. Or, a financial power of attorney can make financial decisions on your behalf should you lack the capacity to do so.
These are just three of many estate planning tools. To set up an estate plan that works for you, it will be beneficial to seek legal guidance.