Estate Planning: Protect the ones you love
Estate planning is the process by which a person makes an arrangement of how transfer of assets will be done in anticipation of death. Regardless of your level of wealth, estate planning is a key part of your overall financial plan. By planning ahead you ensure better control, privacy, and an opportunity to leave more of your legacy to your loved ones.
What does Estate Planning entail?
It encompasses the total property, both real and personal. The documents necessary are;
This is a document in which a person expresses their wishes upon death.
Types of wills.
Oral will- It must be made in the presence of two or more witnesses and is only valid if the person making it(known as the testator) dies within three months after it is made because:
- a) there is the danger that some details may be forgotten if the period is long
- b) such wills are often made in a state of panic, fear, or anxiety, and the three months period allows them to reconsider.
Written will- It can be in any form, handwritten, typed, printed, etc. It can also be in any language and may be written on any material as long as the material is visible. The testator must sign the will in the presence of two witnesses, and the two witnesses must sign the will in the presence of the testator, but not necessarily in the presence of each other.
Element/Clause in Wills
It is important to have a guardianship clause if one has children. Some wills or trusts incorporate this segment but where they do not, ensure you have a Guardianship Designations document so that your children may have someone to take care of them in case of your demise.
A trust may be defined as a legal relationship created by a person when he places assets under the control of a trustee for a specified purpose or for the benefit of a beneficiary or beneficiaries, of whom he may be one also. The trust may be created during the lifetime of the person or after his death.
Power of Attorney(s)
This document is important because, in case of disability, the person may act on your behalf, meaning that the person can enter into financial transactions and make legal decisions as if it were you. This is to avoid the courts deciding how your assets will be distributed.
Generally, under Power of Attorney, the appointed person is granted the right to make important healthcare decisions on your behalf in the event of incapacity. Hence it is important to choose someone that you trust.
It is a legal document that adds or changes something in a will.
This document is essential where some of your possessions are not dictated in the will and you have people that you want to assign to as beneficiaries e.g retirement accounts and insurance plans.
Letter of Intent
This is a letter written by you stating what you want to be done to a certain asset after your death or if you are incapacitated. It may also provide details of the funeral or other special requests. This letter is often left to the executor of the beneficiary.