September is National Preparedness Month! Being prepared includes taking time for long-term estate planning. Estate planning explains how your assets will be managed and/or distributed if you become incapacitated.
If you don’t have a will or trust in place, your wishes will not matter. Worse yet, if your family relies on you, they could really suffer. Don’t let this happen to your loved ones, especially if you have family members who rely on you for their very survival. Without a plan in place, your family is left to haggle with the courts (and maybe each other) to settle your estate.
Follow our guide below to get an overview of the various types of assets. Then learn the differences between the basic options in estate planning – wills, trusts, and power of attorney. Then you can make a more informed decision about which ones you use to make your wishes known so the right people and organizations receive what you want to give them.
Assets cover a wide range of useful or valuable things. Real estate, cars, your home, personal property, investments and cash are all considered assets. Assets include investments such as stocks, bonds and mutual funds. Life insurance is also considered an asset. Personal property, such as collections you own, furniture, antiques, tools, etc., are also considered assets. If you own a business, assets include inventory, equipment, property and accounts receivable.
Nowadays, digital assets also need to be accounted for, including online accounts such as PayPal, bank accounts, investments, social media pages, photos and documents you’ve stored online or in the cloud. Read our blog post, 5 Things you Need to Know about Digital Assets, for more information.
Making a will, setting up a trust and choosing a power of attorney are all components of estate planning. Estate planning includes managing your assets and deciding how those assets will be distributed once you can no longer make decisions or pass away. Estate planning also involves making plans for your care as well as others who rely on you for their care and support. A carefully thought out estate plan will also keep taxes to a minimum. An attorney can help you create an estate plan that covers all of the bases. See our list of estate planning attorneys who work in Washington state.
Writing a will as part of estate planning is critical if you don’t want the state deciding how your assets will be distributed. A will is a legal document that describes your wishes for handling your property and assets. There are a few requirements: you must be sounds of mind, 18 years of age or older and in Washington state, you need witnesses to the will. There are a few things a will cannot cover – learn more by reading our recent blog post, Need a Will? What You Need to Know to Write Your Will.
Some people prefer to create a trust to determine how their assets will be handled in case they become incapacitated. Trusts are also created to outline how money and assets will be distributed to beneficiaries upon their death. According to an article by AARP, people with larger estates may choose to set up a trust rather than a will. AARP says that setting up a trust minimizes the probate process. It can also provide long-term support for family members with unique needs. Trusts can also be set up to limit the money a beneficiary receives at any one time, says AARP.
Power of Attorney
If you become incapacitated, your power of attorney can make decisions about your health and assets on your behalf. A power of attorney also manages or pays bills, handles your investments, etc. Most people choose a trusted friend or relative as their power of attorney. We offer to-it-yourself legal kits and forms to set up your power of attorney – click HERE, then scroll down to the “Power of Attorney” kits.
This blog post is not offered as specific advice, which may only be provided by an attorney based upon each individual situation. To find an attorney, click here to visit our attorney referral page