One of the most common mistakes that people make with estate plans is that they only think about their assets. They think about the items that they own or the money they still control in various accounts. They believe that the point of the will or the estate plan is just to past these assets on.
And it is true that you can use your estate plan to pass assets to the next generation. But it’s also important to remember that this is not all your estate plan can do. Some people overlook important steps, while others decide that they don’t have enough assets to make an estate plan. Both of these mistakes can be avoided if you just consider what else an estate plan can do.
Paying off your debts
For instance, one thing that the estate administrator has to do is to pay the debts that the estate still has. They don’t have to pay this out of their own assets, but they use the assets from the estate to do so. Still, a lot of debts and taxes do have to be paid before assets are even distributed. So you definitely want to make a plan for this to happen that works with the rest of your estate plan in passing the remaining assets on to your heirs.
Setting up a power of attorney
Another example of something that estate playing can do is to use a power of attorney to choose an agent. This person then has the legal ability to make decisions on your behalf if you become incapacitated and the power of attorney goes into effect.
There are two different types of powers of attorney that are generally used. One is for financial or legal decisions, while the other is for medical decisions. You can choose different people to do both of these jobs, or you could choose the same person to be your agent in either case. The key is just to make sure that someone has been chosen to make these decisions if you need their assistance as you age.
Creating your plan
These are certainly not all of the things an estate plan can do, but they help to show how it goes far beyond asset distribution. Make sure you know how to set your plan up properly.
