There are a lot of things to know about estate planning. It can be a complex process, but it’s important. Here are some basics that all business owners should know.
First, you need to make a will. A will is a document that clearly states your wishes for your estate after you die. It’s important to make sure your will is legally valid, so it’s important to work with an attorney.
Second, you should set up a trust. Trusts can be very helpful in estate planning, and there are different types of trusts that can be useful for different purposes. Again, it’s important to work with an attorney to make sure everything is done correctly.
Third, you should appoint a power of attorney. Power of attorneys are individuals who have the legal authority to act on your behalf if something happens to you and you can’t take care of things yourself. You should designate both health care and financial power of attorneys to ensure that your wishes are carried out no matter what happens to you.
These are just some basics when it comes to estate planning for business owners. There are many other things to consider, so if you’re interested in learning more, contact an attorney today!
What is a Power of Attorney?
A power of attorney (POA) is a legal document that authorizes another person, known as an “agent” or “attorney-in-fact,” to act on your behalf in financial or legal matters. You, the “principal,” retain control over who you appoint as your agent and what authority you grant them. A POA can be broad in scope, giving your agent the power to handle all of your financial affairs, or it can be limited to a specific task, such as selling your home. Powers of attorney are an important part of estate planning and can be used to plan for incapacity as well as death.
There are two types of powers of attorney: durable and non-durable. A durable power of attorney remains in effect even if you become incapacitated, while a non-durable power of attorney is automatically canceled if you become incapacitated. Most powers of attorney are durable.
When choosing someone to appoint as your agent, it’s important to choose someone you trust implicitly and who has the financial knowledge and acumen to handle your affairs competently. You may want to consider appointing a co-agent, which can provide built-in checks and balances, or naming someone who lives in another state in case you become incapacitated while traveling.
It’s also important to understand that a power of attorney does not extend to medical decisions. For those decisions, you’ll need to execute a separate document known as a healthcare power of attorney or advance directive.
What is a Beneficiary?
For those who don’t know, a beneficiary in estate planning is a person who has been assigned to benefit financially from a trust, will, or life insurance policy.
Aside from that, you can also name individual financial accounts or beneficiaries in the event that you pass away.
Keep in mind that only the owner of the policy, trust, will, or account can assign a beneficiary.