Five Elements of Sound Estate Planning
A solid estate plan consists of multiple elements, each of which serves a different purpose. Each of these is vital to making sure your legacy is passed on to your loved ones without imposing undue burdens on them. For those who are highly wealthy, it can also serve to decrease taxes by keeping the entire estate’s value down to a more manageable (and untaxable) sum.
Here, we’ll go over five elements of a sound estate plan.
When most people think of estate planning, they think of a will. The purpose of a written will is to leave your assets to your desired beneficiaries and to name an executor who will be responsible for carrying out your last wishes. This document should be signed in the presence of two witnesses, both of whom must also sign the document.
The next document is a living will, which in Illinois is called a declaration. This document outlines your wishes regarding healthcare in the event that you become incapacitated. Here, you can set forth which treatments you’d want to be done, which ones you would not want to receive, and the situations that would determine what would be acceptable or unacceptable.
Powers of Attorney
In connection with a declaration is power of attorney. With respect to making decisions about medical treatments, you can create a durable power of attorney for health care, which names an individual who will have the authority to make those types of decisions on your behalf. When naming your power of attorney for healthcare, you can also leave instructions for him or her to follow, thereby combining this with the function of a declaration.
You can also name someone to have the authority to handle your finances if you should become unable to do so yourself. This person will therefore have a financial power of attorney.
Probate is the term used for court proceedings through which your executor is given authority to distribute your estate. It can be a lengthy and expensive process, and it will typically be in your family’s best interest to avoid it. Some methods can be used to eliminate the need for probate altogether, such as creating a living trust or co-owning property with a spouse. The exact methods you use will depend on the size of your estate and the types of assets you hold, so you’ll need to tailor your probate avoidance method to your situation.
The final element of sound estate planning isn’t a document or legal form, but an overall approach—it needs to be done proactively and consistently. It shouldn’t wait until you think it’s needed since by then, it might be too late. In addition, your estate plan should constantly be updated any time your family or financial situation changes. This will prevent complications later on and help to avoid probate.
If you’re struggling to know where to start with your estate planning or if you have a complex situation with your estate, consulting with an experienced attorney can be a great way to get everything together. Hart David Carson LLP will provide the guidance you need when planning for your estate.