What is an Estate?
An estate includes any and all property you own or have an interest in at the time of your death. Your estate may encompass your home, your cars, your personal possessions, as well as your investments, life insurance policies, or retirement accounts.
So What is Estate Planning, Then?
Estate planning allows you to decide how your affairs are handled once you’re gone. You can dictate who will receive your property, as well as provide instructions for caring for your children or other loved ones who may be unable to care for themselves. You can even create instruments to allow others to make decisions for you should be become unavailable or incapacitated.
What Sort of Tools Are Used in Estate Planning?
Many estate planning tools are available for people planning for the future or even the unexpected. Learn about estate planning by using Legal Street’s informational articles so you can choose the tools that are right for you:
- Wills – Wills allow people to decide to whom their property will go after their passing. Wills also allow people to name a representative to handle the administration of their estate or to name people to act as guardians for their minor children. Keep in mind that each state has its own unique will requirements, so professionally-drafted documents are advised.
- Trusts – While there are many different types of trusts, they are all primarily used to hold property for a specific stated purpose. Trusts are administered by trustees who often oversee the management of the property contained in the trust as well as the distribution of its assets, if necessary. Trusts can also be used to reduce estate taxes after your death, or can even be used to provide care for loved ones when you’re gone.
- Power of Attorney – A power of attorney allows others to make decisions concerning your health, property, and interests on your behalf. Powers of attorney are frequently used to allow agents or designated professionals to manage the principal’s property. Powers of attorney may also be used to allow subordinates to act on a principal’s behalf when operating a business. A power of attorney can be written to grant broad or narrow powers depending on the principal’s intent. A power of attorney can even be drafted to only take effect when the principal is incapacitated or unable to act on his or her own behalf (also known as a Springing Power of Attorney).
- Advanced Directives – Advanced directives are typically used for end-of-life planning purposes and are frequently referred to as Living Wills. Advanced Directives typically only go into effect once you encounter serious health complications. These directives may name someone to make healthcare decisions on your behalf, or they may include legal instructions such as Do Not Resuscitate (DNR) orders.
- Guardianship – A legal guardian is an individual appointed to make decisions on behalf of others. The process of appointing a guardian or seeking to be appointed as a guardian is often referred to as “guardianship.” Legal guardians are typically only appointed to look out for those who are unable to look out for themselves. This usually corresponds to minor children, but guardians can also be appointed for adults who are incapacitated or have special needs. Guardianships are typically created either by courts or by operation of a legal document, such as a will.