Creating an estate plan is one of the most important things you can do to preserve your wealth for the future. However, many people assume that having a plan is a simple matter of drafting a Will or Trust that transfers all assets seamlessly to beneficiaries after their death. In reality, an effective estate plan also protects your property and conveys your wishes should you become unable to do so yourself.
Below is an overview of estate planning tools that help you protect your wealth, legacy, and loved ones.
Also known as a Last Will and Testament, a Will protects your loved ones and your estate by:
- Naming beneficiaries and identifying what property each person receives
- Appointing a legal guardian for your minor children
- Naming a trusted party to manage your minor children’s inheritances
If you die without a Will, your wealth will be distributed according to Oklahoma’s laws of intestacy, which may yield results contrary to your wishes.
2. Revocable Living Trust
A Revocable Living Trust is a legal formation that holds your assets during your life and distributes them in accordance with your wishes after your death. This arrangement allows your family to avoid the delays and expense of the probate process.
Revocable Living Trusts are often accompanied by Pour-Over Wills that allow any property that you accidentally leave out of the trust to be added and distributed as directed.
3. Irrevocable Trusts
As its name suggests, an Irrevocable Trust can’t be modified or terminated without approval from the court. After you transfer assets into one, the Trust owns them and the Trustee controls them. One of the biggest advantages of this estate planning tool is that it prevents your wealth from being eroded by estate taxes and creditor claims.
One type of irrevocable trust is a Beneficiary Defective Inheritance Trust, which shields assets from gift and estate taxes when a beneficiary sells them to the trust. The beneficiary is also eligible to receive discretionary distributions from the trust in the future. Another type is the irrevocable life insurance trust, which is designed to hold life insurance proceeds and exclude them from the taxable estate.
4. Financial Power of Attorney
A financial power of attorney enables you to assign an agent to act on your behalf if you become too ill or disabled to manage your own affairs. This person, who can be a family member, trusted friend, or an attorney, can enter into financial transactions, buy and sell property, and in general make legal decisions for you. You can revoke this type of POA once you regain competency; otherwise, it can last until you pass away.
5. Healthcare Power of Attorney
A healthcare power of attorney designates another person to make important healthcare decisions on your behalf in the event that you become incapacitated. It is essential that you name someone you trust, who shares your views regarding sensitive issues and will not agree to treatments that you would have refused. Always appoint a backup agent in case the person you name is unable to act when needed.
Contact an Oklahoma Planning Attorney
At Pence Law Firm, P.C. we help families of all backgrounds use estate planning assets to build and protect their legacies. Whether you are a young couple just starting out or a high net-worth individual with a sizable estate built over a long lifetime, we will help you plan your future with confidence. To schedule a consultation today, call (918) 376-8505.