When you make a recipe, it is important to use all the required ingredients, otherwise the end result will likely not be anything like what you were hoping for. An estate plan is similar to a recipe in that there are certain things that it should contain, or else the individual’s wishes may not be met after they have died, as an estate lawyer in Sacramento, CA can attest. In some cases, the result is a disaster, with long-drawn out legal battles and family fighting.
The following are the key “ingredients” you should have for your estate plan “recipe.”
Wills and Trusts
A person’s will leaves instructions on how they want their assets and property distributed. The individual can not only be specific about who gets what asset, but they can also be specific about who they do not want to get any of their assets. If a person dies without a will, then the laws of the state will determine how their estate will be distributed.
Many people also use trusts as part of their estate plan. With a trust, there is not probate process like there is with a will, so there is not delay in the beneficiary receiving the funds you want them to have. No probate also means that the contents of the trust and beneficiary stay private and does not become public information. A trust can also help minimize estate tax amounts.
Letter of Intent
Letters of intent are not legally binding, but they can be very helpful for your family and other loved ones to understand and make sure your wishes are carried out after your death. It is especially helpful if you and your loved ones were unable to discuss these matters when you were alive. Your letter of intent can provide instructions on the funeral and burial arrangements you would like, why you have left a certain piece of jewelry or other heirloom to a family member, or why you have distributed your estate in the way you have. These letters can help alleviate misunderstandings or hard feelings among those you have left behind.
Power of Attorney
There are two types of power of attorneys, one who handles financial matters and one who handles healthcare matters, should the individual become incapacitated and is unable to do so themselves. You can pick the same person for both or two different individuals. Having a power of attorney already in place can help alleviate the stress and chaos that often occurs when a loved one becomes unable to do these things on their own.
There are multiple accounts that a person has that may require one or more beneficiaries, including insurance policies, retirement accounts, bank accounts, and investment accounts. It is a good idea to review those accounts periodically to make sure that the beneficiary you have called is still the person you want. For example, if you divorce and you have your ex-spouse named as beneficiary to a life insurance policy, you will need to physically change to another person or your ex will receive the policy proceeds upon your death. It is also a good idea to have a contingent beneficiary listed, as well.
Thanks to our friends and contributors from Yee Law Group for their insight into estate planning.