Planning for the future is an essential part of life, and having a comprehensive estate plan is critical to distribute your assets according to your wishes, as well as to protect yourself and your beneficiaries.
A comprehensive estate plan involves individualized strategies to maximize your assets and simplify their distribution. In many cases, strategies involve estate planning tools like trusts, wills and directives.
A will is one of the most common estate planning tools. It is a legal document that describes what you want to do with your property after you die. In addition, a will allows you to:
- Designate beneficiaries
- State your last wishes
Wills must go through the process of probate, where a judge will ensure that the will reflects your wishes. In addition, the court will ensure that you were of sound mind when you created the will and that the will is valid according to the law.
A living trust is a legal tool you can create while living to manage your assets. When creating a living trust, you designate a trustee to oversee and distribute the assets in line with your instructions.
The living trust can replace a will and avoid the process of probate. However, you can have both a will and living trust. Usually when a person has both, the will is used to distribute any assets that the trust does not cover.
A trust has many advantages, including:
- You have the ability to designate someone to manage your estate if you become incapacitated.
- You can set conditions for distributing your property, like requiring a specific event to occur before transferring ownership of an asset.
- You avoid probate, which is beneficial because it saves time and prevents potential objections to the will.
There are two types of trusts: a revocable living trust, which allows you to control the assets inside the trust while you are living, i.e. you can change your preferences or revoke the trust at any time; and an irrevocable trust, which generally you cannot change after you create it, absent certain exceptions as allowed by law.
Power of attorney (POA)
A durable POA allows you to designate someone to have legal authority over your affairs, usually financial matters if you become incapacitated or cannot make decisions.
A medical directive is composed of two essential legal documents: a medical power of attorney and a living will. The medical power of attorney designates someone to make medical decisions on your behalf when you are unable to do so. The living will states your wishes regarding end-of-life care.
Building a complete estate plan is not as easy as many believe. It requires careful planning, specific knowledge and consideration of Texas law.
Having an estate plan is essential to protect your assets and give you the peace of mind that comes with ensuring the well-being of your loved ones if you become incapacitated or die. By taking these important steps now, you secure your future and preserve your legacy.