One of the reasons why so many people put off planning for the latter portion of their lives and eventual passing is because they really just don’t know where to begin. There are many different financial instruments that can be utilized, the optimal combination of which is going to vary depending on the specifics of your wishes and the exact makeup of your assets. However, when you break it down to its simplest form estate planning must achieve the transfer of assets to your heirs while including an incapacity component so that your wishes are carried out should you be alive and enable to communicate in real-time.
Most people are aware of the fact that the most widely utilized vehicle of asset transfer is the last will. The reason why some people look for alternatives to the last will is because your estate must pass through probate if you use a will as your primary transfer vehicle. Probate does provide certain protections, but it is public and it affords disgruntled parties a forum within which they can contest your wishes. In addition to this, probate can take months or even years to run its course, and your heirs do not receive their inheritances until the estate has been probated and closed.
Is response many people will use a revocable living trust rather than a last will. When you use these vehicles you name a trustee who will administer distributions to your beneficiaries in accordance with your wishes upon your death or incapacitation, and the transfers take place outside the process of probate.
Incapacity planning is largely done through the execution of a living will and the appropriate durable powers of attorney. A living will is used to state your medical preferences with regard to the types of procedures you will accept or deny in the event of your incapacitation. Durable powers of attorney remain in effect after the incapacity of the grantor, and most people will execute a durable power of attorney for health care as well as a financial power of attorney. Because the ideal representative for each purpose may differ, you’re perfectly free to empower two different respective attorneys-in-fact.
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