Perhaps the most confusing element in the financial plan is the estate plan. An estate plan is a legacy strategy that is designed to anticipate and also arrange for the care and disposition of an individual’s property at death. From the complex legal paperwork to the challenges of maximizing the legacy left to the beneficiaries, many people find it hard to continue with estate planning Charleston. Here are five critical elements that will help one demystify estate planning.
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A will is probably the first document that one might think of when considering preparing an estate plan. It is the document that states to whom an individual wants to distribute his assets when he dies and also helps ensure that the assets are disbursed properly when the right time arrives. Also, if a person has young children, the will must state who will be the guardian in case he or his spouse becomes incapacitated.
Trusts are another legal element one can incorporate in estate planning Charleston. These legal arrangements hold assets on behalf of beneficiaries or heirs. There are different types of trusts, such as revocable and irrevocable trusts, testamentary trusts, and others. An individual setting up the trust can specify how beneficiaries will receive assets in the trust.
The retirement accounts and life insurance policies on which beneficiary designations are found. These designations specify who will receive benefits on the death of an individual, and also, they supersede what is in his will. So, it is important for everyone to review their designations regularly or at least once a year.
Power of Attorney
A power of attorney allows an individual to designate someone to step in and manage his finances in case he becomes incapacitated. According to the estate planning Charleston law, a single person should consider framing this document as there is no spouse to immediately jump in to serve in this particular role. If a single person does not have power of attorney, then a guardian will be appointed by the court. The court might select someone who is not ideal for the job.
The function of healthcare directives is similar to that of a power of attorney. The difference between these two is that a power of attorney handles the financial decisions of a person while healthcare directives handle his medical decisions. A living will is a written statement providing instructions for the person’s health care in case he becomes incapacitated. A health care proxy, the second document, designates a person who will be making decisions on behalf of the incapacitated person.
It is not enough to just incorporate the above-discussed elements into the estate plan. Also, an individual must review all these documents regularly to help ensure that all their needs will be met as their life changes. It is recommended to hire a professional estate planning attorney so that everything is completed accurately.