When you ask the average person their feelings on an estate plan, most people will probably tell you that an estate plan is something reserved for the wealthy. The truth is that every consumer who has a family and any assets needs to have an estate plan in place. An estate plan will help make it easier to get your final wishes through the probate court and it will ensure that your assets are distributed as you want them to be after you have passed away. Every estate plan has some basic elements that need to be included if your plan is going to fit your life.
Depending on your asset situation, your estate planner may choose to do a will or a trust. If you have considerable liquid assets and real estate, then it will probably be a trust. If you do not have considerable assets, then your planner will use a will. The biggest difference between the two is a will has to go through probate court where a trust, for the most part does not.
Your will outlines who you want to administer your estate when you are gone and how you want your final assets to be distributed. It is important to remember that if your estate expenses are more than your assets, then no one will get a distribution from your estate except your creditors. But your will is where you outline exactly how you want your assets handled and who is to handle them for you.
A power of attorney is when you legally allow someone else to handle your financial affairs and sign contracts for you. Sometimes you use a power of attorney when you are incapacitated and cannot speak for yourself. But if you have to sign contracts on the other side of the country, the easiest way to handle the situation is to give someone you trust a power of attorney to sign those documents for you.
A health care proxy, also known simply as a health proxy, is a declaration made by you that allows someone else to make medical decisions on your behalf if you are ever incapacitated. If you have special religious beliefs or an aversion to certain surgical procedures, then having a health proxy in place can make sure that you are not subject to anything you are against, even if you cannot speak for yourself.
If you need to protect assets from processes such as a Medicaid application or a creditor lawsuit, then much of that can be done in your estate planning. Your planning expert will use legal vehicles such as LLC structures and other ways of protecting your assets.
If you do not already have an estate plan, then now is the time to get one. If you have assets (a house or a car) and a family, then you need to have structures in place that will protect your family after you are gone.