For many Americans, estate planning often takes a backseat to their busy lives. A recent statistic revealed that a staggering 67% of people in the country do not have an estate plan — an oversight that can lead to devastating consequences.
Estate planning is a dynamic process that legally establishes your wishes for property distribution, health care decisions and financial management. As you look into estate planning, you might wonder: What essential documents do you need to take control of your legacy when you are no longer here?
Document #1: A will
A will is the foundation of your estate plan. It allows you to outline how you want to divide and distribute your assets after you pass away. Without this document, California’s intestacy rules will oversee the distribution of your assets, which may not reflect your values and preferences.
By including a will in your estate plan, you can also ensure that your minor children will have someone you trust to care for them if you or their other parent can no longer do so. This helps you secure your children’s future no matter what life throws your way.
Document #2: Durable power of attorney
In the event that you become unresponsive or incapacitated, whether due to an illness or an injury, a power of attorney can be a crucial document your loved ones can turn to. With this document, you can ensure that there is someone you trust who can make all the legal and medical decisions on your behalf. This can be a huge relief for your loved ones who may be overwhelmed with emotions during such an uncertain time.
Document #3: Trusts
Trusts are versatile tools and a crucial component of estate planning. They help you achieve a range of goals, from avoiding probate to minimizing estate taxes. Trusts also allow you to maintain more control over how and when you want to distribute your assets.
You can also set specific conditions for inheritance. For example, if you want to ensure your children use their inheritance for education, you can create a trust stipulating those terms.
Securing your legacy
Taking the time to create a comprehensive estate plan now is one of the most thoughtful gifts you can give your family. By making these documents, you are taking control of your legacy and ensuring a stable future for your loved ones.
