Regardless of age or net worth, you should always consider creating an estate plan. Without one, your assets and personal wishes after you’re gone might not be fulfilled the way you’d like them to be. However, people often overlook many essential components when drafting their estate plans.
So, what elements should you incorporate into your estate plan so it fulfills its purpose and protects your family’s financial future?
Your will outlines how you would like your assets to be distributed upon death. It also allows you to appoint an executor, which is the person responsible for carrying out the will’s instructions.
Trusts allow you to transfer assets from one person or entity to another without going through probate court. They can also help reduce estate taxes. Far from being the province of the ultra-wealthy, trusts are being used by many people to help protect their heirs’ future.
3. Power(s) of attorney
A power of attorney (POA) grants someone else the authority to act on your behalf if you become incapacitated or unable to make decisions on your own.
4. Advance directives
Health care directives outline your wishes regarding medical treatment if you are unable to make decisions. They typically include information about life-sustaining treatments, organ donation, and end-of-life care preferences such as hospice care or palliative care options.
An estate plan is crucial for anyone, regardless of wealth or life circumstances. It can seem overwhelming, but it doesn’t have to be complicated or time-consuming if you know what needs to be included in every plan. By taking the time now to create an effective strategy for the future, you can rest assured that your family will avoid any unnecessary stress related to managing their affairs after you’re gone. Working with someone familiar with Arizona’s laws is essential to ensure that your estate plan is legally sound. While the state has no inheritance or gift tax, you may need to consider the federal estate tax laws.