Estate planning is a method of properly organizing your estate so that things will run smoothly in the case of death or incapacitation. It isn’t a plan you can draft in one day neither is it a vacation plan in which you can go online and search for the best places to visit. Estate planning is a complex and time consuming process.
There are certain reasons why estate planning is very important not just for the wealthy; but everyone who has an asset to leave for their heir after they pass. It is a common believe that estate planning is only necessary for the wealthy class in the society who has chains of companies to leave behind after their death. But this is not in any way proper. Some of the reasons for planning an estate could be for tax avoidance, preparation for incapacitation, inheritance, etc.
Estate planning is not a do–and–forget matter. It demands constant review and update. The circumstance as at the time of planning your estate might have change so there is need for an update to prevent your estate plan from being invalid when it is time for usage.
Various documentations are involved in planning an estate. If one of this document is absent, the estate plan might be flawed. This is another reason for a regular review and update of an estate plan as it will give you the chance to know if there are missing or wrongly filed documents. Such documents include; a will, a durable power of attorney, heath care proxy, trust, living will, etc.
Among these documents, there are very vital ones that should not be omitted from your estate plan and they should be done on time. Let’s talk about some of them.
Last Will and Testament
A will is a written legal document which conveys the testator’s intentions as to how their estate should be share among heirs. It also names the executor. Will comes first in this list to show how important it is in an estate plan. An estate plan without a will is as good as not planning. A will takes effect after the death of the testator.
The executor is named in a will. An executor is a person who the testator has granted legal rights to see to the distribution of his assets at his death. An executor could be a spouse, a friend, an attorney, etc. The testator’s choice of an executor is based on how much he trusts the person to properly follow his will.
There are various types of will; some are highly recognized in court while others are not recognized.
Testamentary will: This is the most recognized type of will. The intentions of the testator are written. Then the will is signed by the testator in the presence of mor6 than one witness.
Holographic will: This is also a written will but unlike the testamentary will it is signed in the absence of witnesses. This type of will is used in emergency situations.
Oral will: This is a very poor type of will and it is the least recognized in court. In this type of will, the testator verbalizes his wishes in the presence of witnesses and this does not involve writing or documentation of any form.
Financial power of attorney
Financial power of attorney is another document contained in an estate plan. It makes legal provision for a person (the second party) to over see the affairs of another person (the first party) in a case of incapacitation of the first party. A financial power of attorney makes decisions regarding the Pearson’s finance on his behalf.
Health care proxy
The health care attorney is given rights to make medical decisions for the person in the case of incapacitation and he is unable to make suc6 decisions. Thes6 decisions include what types of treatment will be administered, the extent to which they will be administered, etc.
In a situation where by your instructions and provisions does not cover your certain health condition, the health care proxy is expected to make decisions in your best interest.
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