If you're considering creating an estate plan, it's important to know what documents are typically included in one. Estate planning involves the process of preparing for the management and distribution of one's assets after death. It's important to create an estate plan regardless of the size of your estate, as it can help avoid complications and disputes among beneficiaries. In this article, we will explore the documents that are commonly included in an estate plan.
Understanding Estate Planning
An estate plan typically includes several legal documents. The most common documents included in an estate plan are:
Last Will and Testament
A Last Will and Testament is a legal document that outlines how you want your property to be distributed after your death. It also appoints a personal representative to handle your affairs after your death.
If you die without a will, your assets will be distributed according to your state's intestacy laws. This means that the state will decide how your assets are divided, which may not align with your wishes.
A Living Trust is a legal document that allows you to transfer ownership of your assets to a trust while you are still alive. The trust is managed by a trustee, who is responsible for distributing the assets to your beneficiaries after your death.
Durable Power of Attorney
A Durable Power of Attorney is a legal document that appoints someone to make financial decisions on your behalf if you become incapacitated and are unable to make these decisions for yourself.
Healthcare Power of Attorney
A Healthcare Power of Attorney is a legal document that appoints someone to make medical decisions on your behalf if you become incapacitated and are unable to make these decisions for yourself.
A Living Will is a legal document that outlines your wishes regarding end-of-life medical treatment. It can provide guidance to your loved ones and medical professionals if you are unable to communicate your wishes.
A HIPAA Authorization is a legal document that allows your healthcare providers to share your medical information with your designated family members or other individuals.
The Importance of Updating Your Estate Plan
Once you have created an estate plan, it's important to periodically review and update it as necessary. Major life events such as marriage, divorce, or the birth of a child may require updates to your estate plan.
Additionally, changes in the law may also impact your estate plan. Working with an experienced estate planning attorney can help ensure that your estate plan remains up to date and reflects your current wishes.
Common Mistakes to Avoid in Estate Planning
When creating an estate plan, it's important to avoid common mistakes that can lead to complications or disputes among beneficiaries. Some common mistakes to avoid include:
Failing to Create an Estate Plan
Failing to create an estate plan can leave your assets vulnerable to disputes among beneficiaries and may not align with your wishes for how your assets should be distributed after your death.
Failing to Update Your Estate Plan
Failing to update your estate plan can lead to complications and disputes among beneficiaries, and may not reflect your current wishes.
Failing to Properly Designate Beneficiaries
It's important to properly designate beneficiaries for your assets, as this can help avoid disputes and ensure that your assets are distributed according to your wishes.
Failing to Consider Taxes
Failing to consider taxes when creating an estate plan can lead to unexpected tax liabilities for your beneficiaries.
Failing to Work with an Experienced Estate Planning Attorney
Working with an experienced estate planning attorney can help ensure that your wishes are properly documented and your assets are distributed according to your wishes.
Creating an estate plan is an important step in preparing for the management and distribution of your assets after your death. An estate plan typically includes several legal documents, including a Last Will and Testament, Living Trust, Durable Power of Attorney, Healthcare Power of Attorney, Living Will, and HIPAA Authorization.
It's important to periodically review and update your estate plan as necessary, and to avoid common mistakes such as failing to create an estate plan, failing to update your estate plan, failing to properly designate beneficiaries, failing to consider taxes, and failing to work with an experienced estate planning attorney.
Contact with an Experienced Estate Planning Attorney
Creating an estate plan can be a complex and overwhelming process. Working with an experienced estate planning attorney can help ensure that your wishes are properly documented and your assets are distributed according to your wishes.
At Heritage Law Office, our experienced estate planning attorney will thoroughly review your needs and wants when planning your estate and provide an outline of your best options, including the creation of an irrevocable trust. Contact us either online or at 414-253-8500 to schedule a free consultation today.
Frequently Asked Questions (FAQs)
1. What is the main purpose of estate planning?
The primary purpose of estate planning is to ensure that your assets are managed and distributed in accordance with your wishes upon your death. It also allows you to name guardians for your minor children, appoint someone to make financial and healthcare decisions on your behalf if you become incapacitated, and potentially minimize estate taxes and avoid the probate process.
2. Do I need an estate plan even if I don't have a lot of assets?
Yes, regardless of the size of your estate, you can benefit from having an estate plan. Even if you don't have substantial assets, an estate plan can ensure that what you do have is distributed according to your wishes. Additionally, an estate plan can provide important directions regarding your healthcare if you become unable to make these decisions yourself.
3. What is the difference between a will and a living trust?
A will is a document that outlines how you wish your assets to be distributed after your death. On the other hand, a living trust allows you to transfer your assets into a trust while you're still alive. A significant advantage of a living trust is that the assets it holds typically don't have to go through the probate process, which can be time-consuming and expensive.
4. How often should I update my estate plan?
It's recommended to review and possibly update your estate plan every three to five years, or sooner if there are significant changes in your life such as marriage, divorce, the birth or adoption of a child, death of a spouse, significant changes in your financial situation, or changes in the law.
5. What happens if I die without a will?
If you die without a will, also known as dying intestate, your assets will be distributed according to the intestacy laws of your state. This may not align with your wishes, as the state's formula for dividing assets does not take into consideration personal relationships or your preferences.