Many wish to set up a solid future for themselves and their next of kin. While that may be a common sentiment, when it becomes a serious conversation, estate planning often gets involved. Estate planning can require serious thought and careful consideration. After all, both in common conversation and popular culture, people may mention wills as though they are the end all be all for estate planning. But, that’s far from the truth.
One estate planning tool that can help is a power of attorney. Should unfortunate circumstances lead you to become incapacitated, or generally unable to carry out actions independently, a power of attorney can help out. It will enable someone (your agent) to act in your interests and take care of various aspects of your assets. Sounds simple, right? Well, that’s just a surface-level explanation. And, unfortunately for those who both approach and exit their own estate planning with a surface level understanding of what they’re doing, they won’t be aware of the caveats.
Power of attorney and beneficiaries
One of the caveats comes with the functions of beneficiaries and trusts. You’ve likely heard of trusts, which aim to transfer assets to the designated beneficiaries. Your designated Trustee of your Trust has the task of making sure that the trust administration process goes seamlessly. Still, sometimes issues can arise with how assets are titled, leaving assets subject to probate. According to Retirewire, one common issue people see is simply designating a power of attorney, but not allowing them to name a beneficiary or a trust to avoid probate.
It’s true, you can be more guarded with what you let a power of attorney do, and ultimately the assets can still make their way to the intended recipient. However, ironically, by being guarded in this way you can open up your assets to the probate process, which can significantly reduce the funds that end up in the hands of your intended beneficiaries. However, by simply allowing the power of attorney to name a beneficiary, probate may be avoided.
Estate planning is a serious topic, and within the tools available there are frequently rules that can alter your plans and open up one’s assets to probate or other risks. Setting up a solid future can hinge on paying close attention to the rules. But it’s perfectly understandable if this can all be stressful. Conferring with professional council can ease that stress on the full ramifications on whatever choices are made.