The Specifics of Estate Planning

The Specifics of Estate Planning.

Estate planning is probably the least understood area of financial planning. Many people think it is only for the rich, or it can be done later when I'm older. None of these are true or wise.

The definition of estate is everything you own, minus everything you owe. Everyone has an estate.

It is very common to hear people, even with a lot of financial resources, not have everything in place, so they become ill or, heaven forbid, have an untimely death.

You've heard of celebrities like Prince or James Brown that have plenty of money but fail to plan.

Therefore, don't you think it is important for the rest of us to make sure that all of our resources are working and that there are no gaps or weaknesses that will surface at the moment?

We need to be concentrating on other things such as our health and recovery.

Estate planning is probably one of the most important components of a solid financial plan. Not only is it important to get your affairs in order in the event of death, but there are many estate planning tools to help you manage your finances while living.

For example, a durable power of attorney can help you protect property in the event an individual becomes unable to handle financial matters.

It also allows that person to authorize someone else to act on his or her behalf. To do things like pay everyday expenses, collect benefits, watch over investments, and file taxes.

The power of attorney must be drawn up by an attorney. This is important. They will keep a copy on file.

I would also suggest that the person you name is someone who has your best interest in mind, as they will have access to your money. This person needs to be reliable, trustworthy and responsible.

Taking the time to identify this person is imperative.

A living trust, also known as a revocable trust, is a separate legal entity that protects property and investments. It's called a living trust because it's meant to function while the person is alive.

The trust is controlled by the person who creates it and can also change the terms. Transfer money, transfer property in and out of the trusts or in the trusts altogether.

That individual can also name a trustee, such as a financial institution or a loved one, to manage the assets in case he or she is unable or unwilling to do so.

Do not wait until you are in a crisis to set up a living trust.

An advanced medical directive lets others know what medical treatment is desired, and it establishes who will make medical decisions for the individual in the event they are unable to make decisions for themselves.

Depending on what's allowed by the state in which the person lives, this document may also include a living will, a durable power of attorney for healthcare, and a do not resuscitate order.

Planning ahead for these things will allow everyone to know in advance what you want.

It will allow expenses to be paid without interruption, and can give you peace of mind as to how you want to be medically cared for in the event you cannot make those decisions for yourself.

Some mistakes are simple and others may be very complex. I suggest talking to the state attorney to give you direction.