The thought of creating an estate plan can seem overwhelming. Maybe that’s why the majority of U.S. adults don’t have one.
While an estate plan takes some thought and consideration, breaking it down into its components can make the project more manageable.
Why have an estate plan?
An estate plan is a set of legal documents outlining your wishes for when you die or become incapacitated. Without an estate plan, New York State will make some of those decisions for you, which may not align with what you want.
Everyone’s estate plan will be unique to their circumstances, but here are some of the key things a plan could include:
1. Will: Your will is the foundation of your estate plan. It is your instructions for how you want your assets distributed. Also, if you have minor children, your will lets you name a guardian to care for them.
2. Power of attorney: A power of attorney is a trusted individual who will handle your financial affairs if you are unable to. This may include paying your bills, managing your investments or selling property.
3. Advance directives: Your advance directives state your preferences regarding medical treatment if you are in a situation where you are unable to communicate. In addition, you can also name a healthcare proxy who can make healthcare decisions on your behalf.
4. Beneficiary designations: Some assets, like retirement accounts and life insurance policies, allow you to name beneficiaries. This allows the proceeds to go directly to your beneficiaries without going through probate.
5. Trusts: Trusts are a flexible estate planning tool that allows you to transfer assets into the care and management of another person or entity (trustee) for a third-party (beneficiary) benefit. After your death, the assets go directly to your heirs without going through probate.
6. Letter of instruction:
While not a legally binding document, your letter of instruction can guide you on matters such as funeral arrangements, important contact information and special bequests.
You will want to work with someone who can help you create a comprehensive estate plan. Once it’s complete, you and your family will have clarity regarding your wishes and assurance they will be upheld.