As a young person, Jason Hartman knows that estate planning is probably the last thing on your mind. We’re scared of even the idea of death, and planning for it acknowledges our mortality in a very real way. Still, especially if you have children or a spouse, estate planning is an important part of life. Begin your life of effective financial planning by planning your estate utilizing the documents listed below.
Usually the first step in estate planning, your will lays the groundwork for your estate and establishes who will inherit your property. It also includes information about who will serve as guardian of your children (should you have any) and who will oversee the distribution of your wealth upon your passing.
Testamentary letters function similarly to a will, though they deal with items of smaller value. These are actual letters and usually deal with smaller, more personal items—dishes, photographs, etc. They should be mentioned in a will and signed by a witness to ensure they are legally recognized.
A trust sets up more specific rules for the inheritance of your money than does your will. It may stipulate that the money left to your nephew be used only for education and given to him in increments upon his 18 birthday. A trust is also useful because it cannot be taken from an individual’s estate to pay debts and is therefore protected from creditors.
Powers of Attorney
Should you lose the ability to make sound legal decisions because of any number of things, you’ll need someone you trust to make these decisions for you. This person holds your powers of attorney and can be divided into two categories. First, a durable power of attorney gives a person or people the ability to govern your finances and legal affairs should you be unable to do it. Second, power of attorney may be given to a person in order that they may make healthcare decisions for you if you are unable. Both are important designations in emergency situations.
Similar to a power of attorney, a living will directs healthcare professionals about your wishes regarding artificial forms of life support. You may desire to be taken off such support if your brain is no longer functioning, or you may choose to remain on. A living will gives living family members and health care professionals informed direction.
Sound financial planning should be a part of your life, even in death. By documenting your wishes, you ensure they are carried out in the clearest, most effective way possible. (http://www.flickr.com/photos/kenningtonfox/5151949770/)
The Young Wealth Team