You should discuss your objectives with an estate planning attorney because there are multiple different approaches that can be taken. The ideal way to proceed will depend upon the circumstances, and this is why personalized attention is so very important.
This being stated, there is a basic framework that applies to everyone in a general way. In this post, we will explain the basic anatomy of a well-rounded estate plan.
Asset Transfer Vehicle
A legal device that is utilized to state your final wishes regarding the distribution of your monetary resources will be your estate plan centerpiece. You may assume that a last will is the right choice if you are not a multimillionaire, but this is really not the case.
There are a number of different types of trusts that can be used, and in many instances, a trust would be a better choice. We will get into the details in another post, but a revocable living trust is the right alternative to a last will for a wide range of people.
Living trusts provide multiple advantages, and the facilitation of probate avoidance is one of them. This is a legal process that would come into play if you use a last will as your asset transfer vehicle. It takes place under the supervision of a court, and it is time-consuming and expensive.
When a living trust is used instead, the trustee can distribute assets to the beneficiaries outside of probate. This allows for a more efficient, streamlined estate administration process.
Letter of Final Instructions
Your estate plan should include a letter of final instructions. This document would not be legally binding in any way, but it is very important. In your letter, you provide the information that the administrator will need to take care of the practical tasks that must be completed after your passing.
For example, you would share contact information for people that should be notified about your death. You simply ask yourself what the administrator will need to know and share that information.
A properly constructed estate plan will address unpleasant realities that you may face toward the end of your life. Unfortunately, a very significant percentage of elders become unable to make sound decisions at some point in time. Alzheimer’s strikes about 40 percent of the oldest old, and this is not the only cause of incapacity.
You can empower someone to act as your financial representative if it ever becomes necessary when you are devising your estate plan. If you have a living trust, you can name a disability trustee to act as the administrator in the event of your incapacitation.
To account for property that has not been conveyed into a trust, you can execute a durable power of attorney for property. The “durable” designation is significant, because this type of power of attorney would remain in effect if you become incapacitated.
Advance Directives for Health Care
In addition to the monetary side of things, you should address health care decision-making. You can name someone to act as your health care agent through the execution of a durable power of attorney for health care or health care proxy.
A living will is another document that should be part of the plan. In this type of will, you state your preferences with regard to the use of life-sustaining measures like resuscitation, mechanical ventilation, artificial hydration and nutrition, etc.
In order for the health care agent to have access to your medical records, you should add a HIPAA authorization. It should be noted that you can give others access to this information if you choose to do so.
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