It's easy to lose track of bank accounts, retirement plans from former jobs and insurance policies purchased along the way. Often, choices made at the beginning of a career are left unchanged even as people get married, have children and go through other life changes. Make Sure Your Named Beneficiaries Are Currentīe sure to check whom you have named as your beneficiary for any IRAs, 401(k) plans, bank accounts and insurance policies you own. You should then give a copy to your doctor, your attorney and whoever will have your power of attorney for health care. Your state will have language you can use to express your wishes in keeping with local laws and requirements. Living Will or Advanced Medical Directive: These estate planning tools are written statements that give specific guidance to your doctors, family and friends as to the level of lifesaving medical care you wish to receive. Instead of giving powers of attorney over health care, financial and business matters to one individual, some people split the responsibility between two or more individuals. Power of Attorney: A power of attorney is a legal document that names someone to oversee and make decisions about your health care, your personal finances or a business( if you own one) in the event you become incapacitated. A key decision for estate planning purposes is to determine whether the trust will be revocable (meaning you can add and remove assets from the trust) or irrevocable (where assets leave your estate permanently). This can make the post-mortem estate settling process much simpler and avoid publicizing family matters you wish to keep private. One of the big benefits to a trust, as opposed to a will, is that assets pass seamlessly upon your death and are not subject to probate court. In general, trusts used to minimize estate taxes allow you to designate a third-party fiduciary to hold assets for named beneficiaries, distributing them according to a plan or time horizon. It can be useful when planning an estate, and many of the more elaborate varieties help minimize estate taxes that may be owed after your death. Trust: A trust is a legal entity that allows a third party to hold and direct property and other assets that you place in the trust. If you pass away while caring for any dependents, you should designate their new guardians in the will. This may include paying off creditors and maintaining property before it is inherited or sold. In addition to designating beneficiaries, a will provides instructions for wrapping up financial loose ends connected to your estate. You may also choose an executor, who will be responsible for settling your estate and filing any related tax returns due after your passing. Will: A will is a public statement designating exactly how your assets will be distributed to your loved ones (the beneficiaries of the will) upon your death. What tools should I consider during the estate planning process? Worse, legal disputes or other conflicts can arise among your loved ones without an estate plan in place. Without one, your assets are subject to your state's probate laws, and the court will determine what happens to any minor children you leave behind. Making financial decisions about your own death is an unpleasant task, to be sure however, an estate plan allows you to have the final say when dividing your estate. Estate planning is the process of designating your assets for distribution after you pass away.
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