Do you know who needs a will and trust? Most people believe that you should be wealthy to have a will or trust. Yet, this is an incorrect assumption. Having a plan in place for your assets is a great way to avoid many headaches in the future. For instance, it’s a great way to ensure that your partner and kids are cared for should anything happen to you. However, you should be well informed about such an important decision that you want to make. You should know what documents you should include in your estate plan and how each can benefit your plans. If you want to know more about how having a will and trust is good financial planning, keep reading.
What is an Estate Plan?
When you have assets and personal property, you should make sure that you’re protected. But how can you achieve this? First things first, you should have an estate plan. If you’ve ever wondered about who needs a will and trust, then the first thing that you should understand is what an estate plan is. When you think of an estate, you generally imagine that you would be wealthy to have one. Yet, this is far from being true. Estate planning is just a fancier way to tell you that you should consider protecting your assets. Your home, car, and assets can be included in your estate plan.
Should anything happen to you, you can rest assured that you’ve set out the terms and conditions of how your assets can be passed down to your beneficiaries.
However, before you can start planning your estate, you should understand what’s included in your estate plan. The following is what’s typically included.
- A will that outlines what you want to do in the event of your death
- A power of attorney for decisions to be made on your behalf
- A medical power of attorney in case you’re in a coma
- A living will that documents what you prefer to happen
- A trust that controls the distribution of your assets
When you have prepared all these documents, you can start planning your estate and calculating your worth. The great news is that if you don’t know how to set up your documents or calculate your assets’ value, you can get an estate planning attorney to help you out.
Who Needs an Estate Plan?
Are you trying to figure out who needs a will and trust for their estate plan? The great news is that you’re not alone. The thing is, it’s easy for you to neglect your estate planning as part of your overall financial planning. Nobody wants to sit down and answer the most uncomfortable questions about what happens to their assets when death comes knocking. Not even you. However, if you have a family and assets under your name, drafting your will should be an important part of your planning. The fact is, everyone should get an estate plan. It doesn’t matter whether you live in a manufactured home or a triple-story mansion.
Having an estate plan in place is a great way to protect your family. For instance, it helps you avoid a mess while saving your family time and money to deal with your estate in the event of your untimely passing. If you’re still wondering who needs a trust and will, you should start planning your estate today.
Vital Parts of Every Estate Plan
Now that you understand who needs a will and trust, you should have a better understanding of the components that are important to create one. There are six main things that your estate plan should include. These will be explained in greater detail for you to understand.
The Will or trust
It’s not a matter of who needs a will and trust, but a matter of knowing why you should have these documents in place. The biggest misconception that you can make is that these are documents that you need if you’re wealthy. You don’t have to have many assets for you to decide how they should be distributed. You should state clearly who your beneficiary is. Most importantly, you should be consistent with how this distribution happens.
Power of Attorney
There are times when you can’t execute your wishes yourself, and you need someone to do so on your behalf. Let’s say that you’re hospitalized for emergency colon cancer surgery. Having a power of attorney signed is a great way to reduce any confusion about what should be done with your estate while you’re away. Things can continue to function even if you’re away.
Designations of your Beneficiaries
The last thing that you want to happen is a court deciding the fate of your assets. But if you don’t know who needs a will and trust, you can find yourself assets in this unfortunate situation. Having a designated beneficiary should help you to avoid messy court battles and fights among your family.
A Letter of Intent
When you’re protecting your assets, the important thing is to be clear about how you want your assets to be distributed. Drafting and signing a letter of intent should give the details about what you want to happen to certain assets. Moreover, you can write one to determine where you want your funeral to be conducted. If this document is disputed, it can be used as a way to sway the judge in your favor in case any fighting over your assets happens.
Medical Power of Attorney
The unfortunate thing is that you can never be too sure of what will happen to you. Life is just that unpredictable. Yet, having an estate plan that follows all the guidelines should help you stay prepared for any moment. Let’s say that you didn’t wake up from your colon cancer surgery. You find yourself in a coma for an indefinite period. Having someone that you trust to handle your affairs until you’re back on your feet is essential. However, this person should be on the same page as you. For instance, if euthanasia is an option, they shouldn’t refuse it if they know you would be for it. This person is the literal definition of someone having your life in their hands. So, choose your candidate carefully.
Designations for Guardianship
Unexpected events affect everyone in your life. Yet, it’s easy for you to forget just how much they can affect your minor children. So, if you have minor children, you should consider protecting them more than anyone else. The fact is, they’re too young to make decisions regarding their future. Having a guardian that you trust and who will have their best interests at heart is important. Not only should they be financially responsible, but they should have a love for children. You want your younger children to be protected at all times. Especially when you’re no longer around.
Estate Planning Protects Your Children
When you don’t name a guardian for your minor children, it can cause many consequences for them. Finding out more about who needs a will and trust should be accompanied by doing a lot of research on the benefits of estate planning for your children. Besides, you don’t want to have your children raised by someone named by a judge or your least favorite relative. In addition, when the courts get involved in your financial affairs, you can’t assume that they’ll appoint the person you prefer to raise your kids. Anyone can ask to be appointed, and it can be a fair opportunity that the judge can grant. So, consider who amongst your family or even friends has the ideal parenting style that you wish to match your values. Furthermore, you should make sure that this is someone who has a great relationship with money.
If you don’t know how to decide on a suitable guardian, you’re not alone. This is why you should speak to a child custody attorney before you make your decision. They can give you a better understanding of what the ideal criteria for this type of person should be.
Planning for the Future
You’d be surprised to find out who needs a will and trust. It’s not only the protection of your assets that matters. Your future is the most important reason for you to plan. For instance, you never know when you’ll need adult day care in your life. Not only is your estate plan the key to creating generational wealth for your family, but it can help you to prepare for anything that can happen. Whether it’s old age or a disability that forces you to live in an adult day care facility.
You don’t want to be a burden on your family. A disability can affect how you access certain things, such as pharmacies. But with an estate plan set out, you shouldn’t worry about accessing such. You can set up a plan that includes this type of care on your insurance coverage.
Estate Planning Protects Your Business
Are you a business owner who has been trying to figure out who needs a will and trust? It doesn’t matter if you have a large-scale construction company or if you’re a residential roofer. The benefits of having an estate plan ready are so vast that they apply to every type of business owner. As a small business owner, you should take advantage of the benefits of having an estate plan in place.
Let’s say that you have a motorsports store that you want your children to inherit as their legacy. The idea is a good one. However, if you haven’t written down a succession plan, it can be difficult for you to ensure that your business operates well even when you’re no longer there. Besides, your business accounts for a large portion of your assets. It’s important to include it in your plans.
Make Things Easier for Your Family
The last thing that your family should worry about when you’re no longer around is debt collection agencies swooping in. This is a family mess that you want to avoid by all means necessary. You’ve heard the horror stories, you have probably witnessed a few as well. This is another reason you might’ve wanted to plan your estate or find out who needs a will and trust. The truth of the matter is that when money is involved, fights can take place. Everyone can feel like they’re more deserving than the next person.
Another situation that you should consider is that your disappearance could affect your family’s finances. Your minor children might not have enough money to take them to college. Your partner can also struggle to make ends meet. However, when you have a plan in place that accounts for your finances, you make it easier for them to carry on with their lives without you.
It can Help to Avoid Probate
Planning is a great way to avoid a risky situation such as probate. This is what happens when a court process distributes your property when you die. Generally, real estate attorneys initiate probate. A will can simplify this process. If you don’t have one, it can take longer to determine how your estate will be divided. This law differs from state to state, depending on whether you had a will or not. It’s important to know your state laws. These are the reasons why you should avoid probate for your estate.
- It can take a while to finalize.
- It can be costly.
- The proceedings aren’t private.
In summary, when you have a financial plan for your assets and other parts of your life, it can make things easier. Additionally, it can help you to give your family the kind of future that they deserve.