One of the biggest mistakes that people make is thinking that they are too young to create an estate plan. Estate planning is not only for the elderly; it is for everyone 18 years or older. The Power of Attorney, Last Will and Testament and Trusts are essential tools.
Power of Attorney
The Power of Attorney is an important tool for people to have during their lifetime. If you ever become incapacitated, this instrument allows the “agent” of your choice to act on your behalf for you. With a robust Power of Attorney your agent will be able to manage your financial affairs and make legal decisions on your behalf. Without this tool, no one, not even your spouse, parents or siblings, will be able to make any financial decisions regarding your individually owned property or make any legal decisions for you.
When a person does not have a Power of Attorney in place, a person must bring a guardianship proceeding in the courts. Through a guardianship proceeding the courts will select a person to manages your finances and legal affairs and the court will determine the scope of the guardian’s powers. The court appointed guardian may be a complete stranger.
Last Will and Testament
As a parent, have you ever considered what would happen to your children if something happened to you today? One of the purposes of the Last Will and Testament (commonly referred to as the “Will”) is to choose the person who would act as the legal guardian to raise your children in your absence. Without this decision stated in your Will, your children’s guardian will be chosen by the courts or by foster care.
Trusts
Trust planning provides one of the leading mechanisms to protect all that you amass during your life. Historically, the wealthiest America families used trusts to protect their wealth. Now, it has become more common place for people of walks of life to use trust to protect assets and transfer a legacy. Trusts may be used for a myriad of purposes, below is a list of few:
- Avoid probate (court process of validating a will)
- Protect assets from your creditors and predators
- Minimize estate taxes
- Manage assets in the event of your incompetence
- Allow you to retain assets and qualify for Medicaid
- Provide for your minor children
- Provide instructions for your adult children
- Protect assets from your children’s creditors
- Maintain your assets in your bloodline