What Are The 5 Components Of Estate Planning

What are the five components of estate planning? We all know that estate planning can be a challenging task. You need to follow several procedures and steps when organizing your estate, including gathering every necessary document, deciding which individuals or organizations to identify as beneficiaries, and making decisions about your funeral and end-of-life care.

The best course of action if you need clarification about where to begin with estate planning, is to retain the services of an estate planning attorney in Las Vegas to guide you through the process. You may get the legal advice and assistance you need at The Giuliani Law Firm to create an estate plan that will protect any assets you want to leave to your family and ensure your loved ones have enough money after you pass away.

What does an Estate Plan Do?

Any effective estate plan should have these three main goals in mind.

• Asset protection for heirs. The value of a person’s assets is protected by an estate plan, which serves as a safety net. It can also guarantee that the individual’s legacy is executed according to their wishes and reduce the time beneficiaries need to wait for their assets to be transferred.
• Allowing a person to choose who receives their possessions. A person can specify who should inherit their assets and what happens to them when they draft a will. An “executor” who will distribute the estate may also be named.
• Letting a person select the person to represent them in decision-making. A durable power of attorney and a health care proxy form are possible additions to estate plans. A health care proxy form serves as a legal document that authorizes someone else to decide about a person’s healthcare if they cannot. A durable power of attorney designates a reliable person—such as a family member or a close friend—to handle a person’s financial and legal matters in the event of their incapacitation.

An individual has to put that information on accounts like 401 Ks, insurance policies, and IRAs if they set up one of these legal forms as part of their estate plan.

What Are The 5 Components Of Estate Planning?

Five key documents and components comprise an estate plan. These components consist of requests and documents that are valid during your lifetime, as well as those that are only taken into account after your death. These documents serve to guarantee your end-of-life desires and needs are met, as well as to distribute your assets among the beneficiaries you’ve named.

Wills

A will is a legally binding declaration specifying who will inherit your property after your death. The state will decide how the property is divided if you don’t have a will. Additionally, a will name a personal representative or executor to carry out your wishes in court. Because a will enables you to designate a guardian for your young children, it is particularly crucial if you have children. A will, however, exclusively addresses probate property—various assets or ownership transfers outside the probate process. Probate does not apply to jointly owned property, property held in trust, life insurance earnings, or property with a designated beneficiary, such as 401(k) or IRA plans. 

Trusts

A trust is a legal arrangement wherein one individual (or an organization, like a bank or law office), referred to as a “trustee,” legally retains title to assets on behalf of another person, referred to as a “beneficiary.” One group of beneficiaries receives benefits from a trust while they are living, and a second group, frequently their children, only starts to receive benefits after the initial group has passed away. There are lots of reasons for establishing trust. The primary motivation is to stay out of probate. Any assets you place in a revocable living trust that expires upon your death go directly to the beneficiaries. The beneficiaries may save money and time as a result of this.

Additionally, certain trusts may provide tax benefits to both the donor as well as their beneficiary. These trusts might be “life insurance” or “credit shelter” types. Other trusts could be used to shield assets from creditors or to improve the donor’s Medicaid eligibility. Trusts are secret documents, unlike wills, and only those directly interested in the trust’s assets and distribution must be aware of them. Another benefit of trusts is that, if properly structured, they will remain effective even in the event of the donor’s death or incapacitation.

Power of Attorney

With the help of a power of attorney, you can appoint someone as your “attorney-in-fact” to handle financial purposes in your absence if you cannot do so. In that case, the individual you select will be allowed to step in and handle your financial affairs. Unless the court appoints a conservator or guardian, no one can act on your behalf if you do not have a durable power of attorney. The legal procedure is costly and lengthy, and the judge might not select the option that best suits your needs. Furthermore, in a conservatorship or guardianship, the representative might need to apply for court approval before initiating any planned actions that she could carry out immediately with a straightforward, durable power of attorney.

Medical Directives

A medical directive can include just a few documents, such as a living will, a durable power of attorney regarding health care, a health care proxy, and medical instructions. The precise paper or documents will rely on your decisions and state laws.

A durable power of attorney on health care and a health care proxy both name a person you choose to make decisions about your health care if you cannot. If you are in a vegetative condition or are terminally ill, a living will give your healthcare practitioner the order to stop providing life support. A larger medical directive includes the provision of a living will and guides if your health is less critical. However, you remain unable to make decisions about your treatment.

Beneficiary Designations

Ensure that your retirement accounts beneficiary designations are current at the same time as you build your estate plan, even if it’s not a requirement. If you do not designate a beneficiary, your specific retirement plan or applicable state or federal laws may govern how benefits are distributed. Certain plans automatically give money to a partner or children. Even if some leave it on the retirement plan holder’s estate, this might have unfavorable tax consequences. Choosing a beneficiary is the sole option for managing the distribution of funds.

Have a Professional Help You Protecting Your Wishes and Assets

Seeking the advice of a skilled estate planning attorney is crucial if you’re ready to draft an estate plan. They can assist you in understanding Nevada state laws, obtaining the required documentation, and creating documents that clearly express your wishes. Every client is approached by the legal team at The Giuliani Law Firm to earn their trust and show our honesty in managing such important cases. 

If you have any questions or want more information, call us at (702) 388-9800.