The Importance of Estate Planning

Estate Planning is an essential step in preparing for the future of not only your own life but also the well-being of your loved ones. It is not uncommon to want to ensure that such critical decisions as those regarding your personal health, the financial protection of your family members, the guardianship of your children, and the distribution of your assets are resolved before you are no longer able to control the outcome of those paramount decisions on your own.

There are several ways that you can properly avoid future financial and medical pitfalls that occur without a strategy in place, but the most common estate planning conduits are mentioned below.

Develop a Sense of Security with Wills and Trusts
If you do not plan to develop a will and/or trust, then you are essentially electing to grant a court the authority to determine matters relative to how your property is divided and who will serve as a legal guardian to your children.

It is to your advantage to create a will and a trust. Although both permit you to make the same types of property distribution decisions, the latter is a legal document guaranteeing that your executor will never face a probate court and that specifics regarding your estate can be managed on an individual basis. If you already have a will, you are not obligated to establish a trust because of a will's generalized nature; however, please understand that your will is subject to a hearing/hearings in probate court. Conversely, it is recommended that a trust be accompanied by a will.

Know the Difference between Standard and Durable Power of Attorney
A standard power of attorney grants a person the ability to make financial decisions on your behalf, but what happens when you become incapacitated? Do the rules of a standard power of attorney withstand incapacity? Absolutely not! That is why it is vitally important to establish durable power of attorney, which legally enables the person you choose to act on your behalf to continue his/her financial duties when you are no longer capable due to incapacity.

Ensure Your Well-being with a Health Care Proxy and Living Will
Incapacity not only affects your ability to make financial decisions, but it also affects your ability to make decisions based on your health care needs. By choosing a health care proxy, you will employ someone you trust to make these critical decisions.

In addition, a living will is an agreement between you and your doctor regarding your plans to use or reject life sustaining methods in the event that you become incapacitated. Although states vary on the validity and enforcement of a living will, it is recommended to have this legal document in conjunction with a health care proxy.

Assist Your Executor in Advance
By preparing and filing documents in a safe and central location, you will undoubtedly help your executor take care of all impending matters with efficiency and effectiveness. Among these documents are insurance policies, medical records, will and trust documents, titles, letters of last instructions, bank statements, tax returns, and deeds.

This information is presented to educate the reader and does not constitute professional tax and legal advice.

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