There are at least three legal documents recommended to fulfill these goals and these includes:
- A Will
- A Durable General Power of Attorney
- A Durable Health Care Power of Attorney
These documents include determining who the inheritors will be, what each beneficiary will get, and how to execute those transfers with the minimum tax consequences as you ensure that the estate has sufficient liquidity to fulfill its commitment.
Net Worth and Laws
The initial step in estate planning is to find out what you have. Your estate involves the entire assets you own such as your real estate, investments and other property, personal possessions, cash retirement accounts, interest in business, life insurance, and anything else of importance.
If you have any debts, these should be deducted from your assets to decide your overall net worth.
Keep in mind that the seemingly definite impression of ownership is not always easy. Once in awhile, more than one individual runs and own an asset. For instance, a joint tenancy with right of survivorship denotes that if one owner passes away, the business partner will now become the top owner.
Some states acknowledge ‘Community property’ law between spouses as distinct from separate property. ‘Tenancy by the entirety,’ on the other hand which only exists in few states, covers property both owned by spouses.
Laws differ from one state to another, and these laws can be confusing, so it is safe to consult experts such as an Ashe Morgan lawyer for you to be aware which laws apply to you if you happen to own any joint property.
Once you have verified what you possess, estimate how much you will need to pay for taxes. Apart from federal taxes, few states also have estate taxes to be paid by the benefactor and while there are states whose inheritance taxes must be paid by the beneficiary.
When you evaluate the impact of taxes, you will have a better knowledge of how much your inheritors will receive.
Healthcare Resolution in the Future
Although it is not a component of estate planning, another vital task is to make decisions about future healthcare. A living will is an illustration of how you want to manage future healthcare decisions when unexpected events happen, and you are unable to make decisions on your own anymore.
While this possibility is not pleasing to think about, it is still essential to address this concern so that your desires will happen even if you are not able to communicate with them. Living wills defines such things as the use of life-supporting procedures and artificially supplied nutrition.
For instance, the “Durable power of attorney” is a condition which you can consult to another person such as a spouse or other immediate relative, allowing them to make decisions on your behalf if you cannot make them on your own.
What Else Should You Know?
An “advance directive” or sometimes called “healthcare directive” integrates the durable power of attorney and a living will, either in one document piece or two separate ones.
Additional to a health care directive, you might also want to consider consulting power of attorney for your properties, to be sure that your financial desires will happen if you are unable to make a sound decision of your own.
If you do not have any of these legal documents organized, the state laws will formulate these vital decisions for you if cannot do it on your own.
By large, estate planning is beneficial not just for your properties, but more importantly to your family as well. Through estate planning, you will be able to equitably distribute your assets to the most appropriate member of the family which also helps your family to stay successful in the years to come.