There are a lot of people who know they should have an estate plan in place who procrastinate because they’re not sure of how to go about it. There are others who feel as though they do not have very complex estates so there’s no real reason to do any specific planning. The reality is that everyone should have an estate plan in place, even if it is just a basic one. With this in mind, we would like to take a look at the basic components of a simple estate plan.
You do indeed need to execute a vehicle of asset transfer, and the last will is the most common way to transfer assets after your death. However, you have other choices, such as the creation of a revocable living trust. The reason why these trusts are appealing to many people is because they enable the transfer of assets outside of the probate process, which can be costly and time-consuming. If you use a last will, your estate does indeed have to pass through probate.
In addition to preparing for the eventual transfer of your assets, you should make sure that you have life insurance that is sufficient to provide for the needs of your family, in the event of your death. Of course, as newborn children enter your family and your financial responsibilities increase, you are going to need to examine your coverage and make sure that it reflects your current financial situation.
The last component that we will highlight is advance health care directives. People usually execute both a living will and a durable medical power of attorney. The living will is used to state your wishes regarding whether or not you would want to be kept alive on life support systems if you were in an unresponsive terminal condition. With the durable medical power of attorney, you appoint an agent to make medical decisions on your behalf should you become unable to make them yourself due to incapacitation.