Estate Planning & Retirement Planning
Many people assume that estate planning is something only the rich need. However, anyone who has any assets, including money, insurance policies or possessions, has an estate. If you want to make sure that these things go to the people you want, and in the proper amounts, it is important to have an estate plan in place. Estate planning leaves these decisions up to you, rather than another individual or a court.
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Wills
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The most basic document in estate planning is a will. This specifies how your assets will be distributed and to whom. If you die without a will, your estate will be divided according to the laws of your state and a judge's decision. Things such as retirement plans and life insurance policies generally already have named beneficiaries, so you don't have to include these in your will. A will should also specify who gets custody of any minor children.
Living Wills
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You should also consider who would be allowed to make important decisions for you in the event you are unable. A living will specifies who will make important medical decisions if you are incapacitated. It also clearly expresses what you wish to be done in a variety of scenarios---for example, if you can't feed yourself, breathe on your own or many other specific situations. A living will ensures that your wishes will be followed exactly.
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Power of Attorney
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Estate planning should also include assigning someone power of attorney to manage your finances if you can't due to physical or mental disability. This is often a trusted family member or friend, but could also be a lawyer or financial adviser. You should carefully consider who would make your financial and medical decisions. Your spouse or children may not always be the best choice, as they may be too preoccupied in times of crisis to follow your wishes properly.
Benefits
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Proper estate planning ensures that decisions regarding your assets and medical care remain in your hands. You aren't relying on someone else to try to interpret what your wishes might be. Additionally, planning can help you can reduce your estate taxes and leave more money to your heirs after your death. You can also use your estate plan to make donations to your favorite charities, or give money to family members, while you're still alive, further reducing taxes on your estate.
Considerations
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There are a variety of ways to do your own estate planning. There are do-it-yourself kits for wills, living wills and medical care directives, and power of attorney. There are also numerous online resources. If you do your own planning, you must make sure that everything complies with the laws of your state, or it may be invalidated. If your estate is particularly large or complex, you should seek the services of an attorney, financial planner or other professional.
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