Estate planning is not just for the wealthy. It ensures your assets go where you want them to with minimal tax and legal interference.
Key Components
- Will: A legal document that distributes your assets after death. However, a will must go through "probate," which is a public, court-supervised process.
- Living Trust: Holds title to your assets while you are alive. Upon death, assets are distributed privately by your successor trustee, avoiding probate.
- Durable Power of Attorney: Appoints someone to handle your financial affairs if you become incapacitated.
- Advance Health Care Directive: Appoints someone to make medical decisions for you if you cannot.
Taxes
The "Unified Credit" allows every individual to pass a certain amount tax-free (the amount changes by year/legislation). Proper planning can double this exemption for married couples.