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Understand the purpose of different estate plan components

On Behalf of | Nov 17, 2017 | Estate Planning

Making sure that your family is taken care of when you are gone is a priority. Your estate plan is the way that you can set this up. This plan must be customized to suit your wishes and needs, so you can’t base yours off of what someone else did.

There are a few different components of an estate plan that you need to think about. Understanding the purpose of each of these can help as you put the plan together. Here are some points for you to consider:

Your final days

Part of your estate plan is letting your loved ones know what you want to happen when you can’t make decisions for yourself. Your living will and powers of attorney designation are the estate plan components.

In this facet of your estate plan, you need to appoint a person who will make financial decisions for you. This person is responsible for paying your bills and handling other financial affairs. You also need to appoint someone to make medical care decisions for you. These include major decisions like whether you will be placed on life support or not.

Your living will is a document that outlines your wishes. Make sure this is kept current because it will trump what the person with powers of attorney says. This document should let medical professionals know what type of life-prolonging care you want. Your wishes for intravenous nutrition and hydration, ventilator assistance and similar points must be noted in this document.

Your assets

Almost all of your assets are covered in your will or in trusts. The exception to these are any accounts that are governed by a payable on death designation. Bank accounts and retirement accounts might have this designation. Now is a good time to verify that these designations are what you want. The same is true for a life insurance policy.

For the rest of your assets, you have to decide if you will include them in your will or if they need to be placed in trusts. Your goal for the assets determine what you do with them. There aren’t many protections associated with listing assets in your will. You can use trusts if you need creditor protection, want to avoid probate and other special reasons.

Having an estate plan in place takes a lot of the stress off of your loved ones. Don’t think that you have all the time in the world to make these plans. Instead, take action right away so that they are in place if something happens to you.

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