Estate planning can include many different components, such as life or disability insurance, an advance health care directive and power of attorney. Life and disability insurance pay out to a named beneficiary if the policy holder dies or becomes unable to work, respectively. An advance health care directive tells people what to do if the person with the directive is in an end-of-life situation. Power of attorney gives another person control over financial or medical decisions for someone who becomes unable to do so.
Business owners can also get key person insurance that attaches to the business, which can cover business expenses for whomever has to take over the business after the owner’s death. Another thing to include in an estate plan is a business succession plan that states who will take over the business when the owner dies. Alternately, a succession plan can direct someone to sell or dissolve a business. If a person plans to pass a business along to another person, it would be a good idea to speak with that person before drafting a will or trust.
An estate plan can include either a will or a trust. Trusts have some benefits over wills in that they can potentially keep assets out of probate court, a lengthy and costly process of distributing assets, and they can sometimes help minimize taxes. Individuals who are unsure of what type of estate plan to create may want to consult with an estate planning attorney.