Estate Planning Basics

Alabama estate planning - Martinson & Beason, P.C.With the uncertainty surrounding the fiscal cliff, many Americans put off estate planning, believing that their hard work would be undone following changes to the law. Now that the fiscal cliff has been averted and many estate planning laws are set through The American Taxpayer Relief Act of 2012, there are no more excuses for putting off estate planning.We know that estate planning is a difficult subject to broach. Most people don’t like contemplating which assets will go to whom after their death and other related questions. However, estate planning is extremely important to protect your assets, your family—and even yourself.

A recent article from CBS News gives a helpful outline of the basics of estate planning, which we think everyone should know. At the very least, being aware of these basics will give you some idea of what’s right for you and what’s not—and for what you aren’t sure of, you can always ask a Huntsville estate planning attorney at Martinson & Beason, P.C.

What is a will?

Arguably the most important document in estate planning, a will is a legal document that dictates where you want your assets to go and who will be the guardian of your children. In a will, you decide who will be the executor of your will. This is the person or institution that carries out your will’s instructions. This person will make sure your assets are divided according to your wishes. You can include an itemized list of your assets and who you want to receive them, or you can draft a more general “Letter of Instruction,” which spells out your wishes in an attachment to your will. Note that if you do not have a will, state law will decide where your property goes and who will become the guardian of your children under 18. This may not have been what you wanted for your family.

What is a probate?

Probate is a legal process. In probate, Alabama state court will officially appoint the executor of your will and accounts for all of your assets and debts. Every will goes through probate. Probate is public, meaning the contents of your will are available to the public. Probate can be lengthy and expensive, especially if one of your heirs contests—or legally challenges—your will.

What is a health care proxy?

A health care proxy is a person that you appoint to make medical decisions for you in the event that you are unable to do so: for example, if you are in a coma. You should choose someone that you trust and that will follow your wishes. Having a health care proxy is extremely important and not something to be skipped.

What is a living will?

A living will is a document that outlines the types of medical treatments that you would want: whether or not you would want to be kept on life support in a coma, for example. A living will lets your family, doctors, and health care proxy know what medical decisions to make for you in case you cannot do so yourself.

What is a power of attorney?

A power of attorney is someone you appoint to make and carry out financial decisions for you, such as withdrawing money from a bank.

What is a trust? 

A trust is similar to a will in that it is used to outline your wishes and transfer your assets. There are many different types of trusts that can be used to serve various estate planning purposes. Even people with uncomplicated estates may choose to set up a trust in order to avoid the publicity and fees of probate. A trust also allows more control over the distribution of your assets.