For many individuals in Texas and other states, the estate plan is one of the most confusing elements of their financial plans. This is because estate planning features complex legal documents, and maximizing the legacies that people leave to their heirs can be challenging. A few tips may help people navigate the estate planning process more confidently.
One important part of an estate plan is the will. The will plays a huge role in laying out who should take over a person's assets when he or she dies. In addition, a power of attorney is helpful for spelling out who will manage a person's finances should he or she become incapacitated.
A trust, which is a legal arrangement that holds assets on a beneficiary's behalf, is another valuable part of an estate plan. Various types of trusts are available to meet people's needs. For example, an irrevocable trust may help to limit one's exposure to estate taxes, while a revocable trust may help an estate avoid probate. Sometimes people create trusts inside of their wills. These trusts are known as testamentary trusts; however, the assets placed inside these trusts are not exempt from the probate process.
Detailed estate planning in Texas helps people make sure that their assets are distributed correctly when the time comes. This ensures that the wishes of the owner of the assets end up being fulfilled, and it also helps to avoid confusion and bickering among the benefactor's surviving loved ones after his or her death. Appropriate legal guidance may help people complete their estate planning in a way that properly addresses their assets as well as what will happen to their young child in the event of their death.
Source: brainerddispatch.com, "The 5 key components of a complete estate plan", Bruce Helmer and Peg Webb, Sept. 12, 2015