Most Illinois residents make plans for their life — where they see themselves five to 10 years down the line. Few make lifelong or end-of-life plans, however, and that is something that may come back to hurt them and their loved ones. Having an estate plan may not be on the top of your to-do list; maybe it is something you have thought about but keep putting off, but there is a reason to create one at your earliest convenience — protection.
An estate plan protects you, your assets and your family. That is, of course, if it is written properly and includes all the essentials that an estate plan should. What are the essentials of a good estate plan?
Essential number one: powers of attorney
A POA is a form you sign for medical and financial purposes. It allows you to give another person the power to make certain decisions for you when you can’t — usually due to illness or incapacitation. We often hear POAs referred to as a living will.
Essential number two: a will
A will is your final instructions for your loved ones; a way for you to let them know what you want to happen after you pass away. You can name your beneficiaries, set your wishes for what should happen to your property, assign someone to take care of any pets or minor children — among various other things. Without a will, there is no saying how things will end up. The courts will get to decide what happens to your estate.
Essential number three: updated beneficiary designations
A will is where you list beneficiaries. However, certain accounts allow you to provide beneficiary designations. These designations override anything you put in your will. So, if you have life insurance, bank accounts, retirement accounts or any other account that allows you to name beneficiaries, make sure those designations are up to date. If you don’t, your assets could end up in the wrong hands.
Essential number four: a trust
This one is optional, but there are plenty of people who can benefit from setting up a trust. If you have minor children, a child with special needs or significant assets, want tax benefits or want to ensure the distribution of assets according to your specifications, a trust is a wise thing to have. You just have to decide if a will is sufficient or if a trust would better suit your needs.
Setting up an estate plan that includes these essentials will benefit you and your loved ones in the long run. Just be sure to review and update your plan every few years or after any major life event to make sure it continues to meet your needs.