Estate planning may not be a priority for everyone, but it is a legal process that allows you to control your asset distributions and wishes if you pass away or become incapacitated. No matter your age or financial status, having an estate plan can be wise. If you are unsure where to start, you can focus on four essential documents:
A will
Having a will ensures financial resources and assets go to your intended beneficiaries. If you do not have a will in place, the state’s legal system will decide where your assets go.
Without your instructions in a will, your loved ones can wind up fighting the courts and amongst themselves with how to distribute your assets and liabilities.
Power of attorney (POA)
In case you become physically or mentally disabled, someone with power of attorney can make decisions in your place. In Maryland, there are two general types of POA:
- A power of attorney to manage your property
- A power of attorney to manage your health
Appointing these parties can ensure you have someone you trust to make crucial decisions in your absence.
Advanced medical directives
Along with POAs, an advance medical directive can be crucial to your legacy and quality of life. This document establishes your wishes regarding the type of medical care you do and do not receive if you are incapacitated.
Having this in your estate plan provides valuable direction for your loved ones. Without a directive, they can wind up struggling to make painful or complicated health-related decisions during an already upsetting time.
Trusts
A trust transfers ownership of property to a trustee, who then uses or manages it for beneficiaries. There are many types of trusts that serve different purposes and benefit specific parties.
Whether you wish to shield assets from creditors, avoid probate or set restrictions on how the trustee distributes funds, a trust can allow you to accomplish your goals.
Crafting a comprehensive plan
Estate planning can seem like a lot of work, but starting with these four essential components can make it easier for you. And when you take the time now to prepare and make decisions, you make things a little easier for the people you leave behind.
