One of the important types of personal legal documents a person needs is called an estate plan. An estate plan is a group of documents that provides a plan to distribute a person’s assets when they pass away. According to Money, 70% of wealthy families lose their wealth by their second generation. When a person makes an estate plan, it can ensure all of a family’s assets stay in the family.
Documents in an Estate Plan
Traditionally, an estate plan includes a Will, a Health Care Directive, a Durable Power of Attorney, and an End-of-Life Plan. The Will is the document that specifies how you want your assets to be distributed after you die. A Health Care Directive will explain your wishes about what type of medical care you would allow if you cannot decide for yourself.
Some people refer to the Health Care Directive as an Advanced Directive. The Durable Power of Attorney designates a person who makes financial decisions in your name. The End-of-Life Plan provides information about whether you prefer to be buried or cremated. It could also include your obituary and any wishes for your funeral.
How an Estate Planning Attorney Can Help You
It’s essential to work with an estate attorney to help ensure all of your plans are documented legally. If there is potential for a family dispute over your assets, working with an estate attorney will ensure your wishes will be followed. When a couple is married, they may wonder whether marriage requires them to have a joint estate plan – or to make two separate plans. Some states recognize joint wills (a will that specifies the wishes of both spouses), but joint wills are uncommon.
Even when a couple has all their assets in common, and they agree on the disposition of their joint assets, it’s typically best for married couples to have separate wills. Separate wills are preferred because, when one spouse dies before the other spouse, the surviving spouse’s assets may change.
Wills or estate plans for married couples may also be affected by whether the couple lives in a community property state. If the couple lives in a community property state, each spouse is the legal owner of half of all the assets and income they both earned during the marriage.
How do Trusts Affect Estate Plans?
Trusts can be part of your estate plan, and your attorney can help you understand how trusts may help you or someone you love. A trust will separate a large amount of money from your estate to protect money for a specific person. Creating a trust can have tax benefits for the person who benefits from the trust. For example, according to Perlin Estate Planning, a SLAT (Spousal Lifetime Asset Trust) allows you to separate up to $12.06 million from your estate, in an irrevocable trust, for your spouse.
Some married couples with joint assets will use a bypass trust. These trusts will split the couple’s assets after one dies and ensure that the dead spouse’s assets go to a beneficiary who is not the spouse. Trusts may be created on behalf of a child’s education or to provide for the care of a disabled spouse or child. Trusts are considered to be a good idea for you if you have considerable assets and want to be sure the assets are distributed in the way you want them to be distributed.
Your estate attorney can ensure that the six major factors in estate planning are accounted for in your estate plan. Those six factors include wills and trusts – as would be expected. The estate plan must also clearly designate a beneficiary for the will and a guardian for any minor children. To ensure your wishes will be carried out, the plan must also document the identity of your Durable Power of Attorney and your Healthcare Power of Attorney.
