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Essential documents in Texas estate planning

The most challenging part of deciding how assets will be distributed following one's death is trying to understand the documentation and terminology related to estate planning. Unfortunately, a lack of understanding can easily cause a person and his or her family to be unprepared in the event of the person's incapacitation or death. A few tips may help people in Texas to complete comprehensive estate planning effectively.

First, there is a significant difference between a living will and a last will and testament. The last will essentially declares how a person's assets will be distributed upon his or her death, as well as who will receive the assets and when. Meanwhile, a living will provides a person's wishes to medical providers in the event he or she becomes incapacitated or terminally ill.

In a similar vein, two different types of powers of attorney exist. With a power of attorney, a person can designate an individual to make financial and legal decisions on his or her behalf if he or she becomes incapacitated. Meanwhile, a health care power of attorney allows the person to appoint a trustworthy individual to make medical decisions on his or her behalf if he or she becomes incapacitated.

With no last will and testament, Texas law will end up determining how a person's estate will be dispersed. This determination, however, may be contrary to the person's wishes. An applicable understanding of the law may help people to complete estate planning in a manner that lines up with his or her desires in the long run.

Source: wealthmanagement.com, "Clearing Up Common Estate Planning Misconceptions", Scott Grenier, June 10, 2016

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