Estate planning is about how you distribute your estate (consisting of your money, home and other assets) after your death — according to your wishes. It is about making sure that the people you care about, receive some of your estate in the amount and manner you want them to.
There are several key documents that people use in estate planning, although it may not be necessary that you have all of these in place.
A Will is the most fundamental document we need. A Will spells out exactly how you wish to distribute your assets among the people you want to inherit them (your beneficiaries).
For many people, a Will that distributes their assets immediately to their beneficiaries upon their passing is enough. However for others, they may have reasons to hold back the distribution over a period of time. For example, you may have young beneficiaries or elderly parents who are incapable of handling large sums of money.
In this case, a Trust can be used in which you appoint a trustee to hold your assets to be distributed to your beneficiaries over a period of time. For example, you could set aside a sum of money to be distributed to your children monthly for their maintenance and education, rather than allowing them to have the money all at once.
Thanks to greater longevity today, we have an increased risk today of falling into mental incapacity during our later years. A Lasting Power of Attorney (LPA) allows a person to appoint persons (called donees) to make decisions and act on his behalf if he should lose mental capacity one day.