Reaching your retirement age shouldn’t be the primary factor for considering the right time when you should be passing your estate to loved ones. It should be done as early as when you have started making a family, and have accumulated assets and properties. Of course, there is so much more to estate planning other than creating a will. To find out more, you should consult experts on estate planning like Brian Douglas.
Here are other legal options you should consider for passing your estate:
#1. Creating a will
Wills are the most common tool used for estate planning, and they are easy to do as well. You can even make one on your own. But to make sure that no problem arises from your will, it is still a better option to discuss it with your estate lawyer.
Those who are planning to make a will on their own by downloading a pre-formatted will from the internet must first do comprehensive research regarding making wills, and on the laws that apply to it, which are specific in your state.
States have slight differences in their standards for what is considered a valid will. So if your DIY will fails to hold up to their standards, then your will may become void or invalid, and the division of your estate will be up to the state where you live.
#2. Creating a trust
Trust fund baby is a ubiquitous phrase used to describe a person whose rich parents gave them their inheritance through a trust fund. Thus, people often mischaracterize trusts as something that only rich people use.
The truth is, trusts are very versatile and you can use it for multiple purposes. A trust is a document that allows the transfer of properties and assets without probate and with minimal tax dues. In it, a grantor, the person who sets up a trust, assigns a trustee to divide the properties to the beneficiaries as stated in the document made by the grantor.
There are multiple types of trusts. Here are some of them:
- Revocable Trust – The most common kind of trust where the grantor has total control of the provisions in the trust.
- Irrevocable Trust – In this type of trust, the grantor gives up his right to the state and the trustee has control of it. However, changes in the provisions of the trust cannot be made without the approval of the beneficiary. Assets may also be removed from the estate by the trustee. This is often used to protect assets and properties from creditors.
- Life Insurance Trust – This type of trusts is where the money from the life insurance of the grantor becomes part of the estate. Therefore, beneficiaries of the estate become the beneficiaries of the life insurance.
- Special Needs Trust – This type of trust is often used when the beneficiary of the grantor has a disability that prevents him or her from managing his finances on his own. In which case the grantor creates this type of trust that contains the provisions the grantor has planned for the financial stability of the beneficiary.
#3. Creating advance directives
Advance directives are the least common tools in estate planning but are considered the most important. In advance directives, you can appoint a person who can make the decisions for you when you lose the capability to make the decisions for yourself.
Here is how you can do it:
- The living will – In the living will, you can express your wishes in the form of writing as to how your medical care should be done if you are not able to verbally communicate them anymore.
For example, you can express your wish not to be put on life support if you become comatose.
- Power of attorney for healthcare – The document names a person who will make the decisions in terms of your healthcare when you become incapable of making the decisions anymore.
For example, if in your old age you will be diagnosed with dementia where it renders you incapable of making decisions regarding your healthcare, your designated power of attorney for healthcare will be making the decisions regarding your healthcare from then onwards.
- Power of attorney for finance – Like in power of attorney for healthcare, you can name a person in your power of attorney for finance, and this person will be in charge of making the required financial decisions when you become incapable of making them.
The designated person cannot make decisions regarding the division of your assets. Instead, he will only be in charge of meeting your day-to-day financial needs.
For example, he will make sure that your bills are paid, and that your hospital needs are bought and paid for, and so on.
There is so much more to learn regarding estate planning. However, various scams have been circulating online with regards to estate planning since vulnerable retirees are often the ones who seek help for it. So be careful and make sure that you are working only with reputable experts and lawyers.
Meeting the right partner and legal help in making the most suitable tools for your needs will make your life easier even when you have passed away.