While a will is essential, it is by no means the only item of a solid estate plan. In fact, if you were to create a will and leave your estate plan as-is, you most likely have significant gaps that leave you and your loved ones vulnerable.
A well-drafted estate plan is one that protects you if you become incapacitated, plans for nursing homes and care later in life, and protects loved ones from enduring the hassles and costs of the probate court.
The Components of a Well-Drafted Estate Plan
If you are unsure where to start, speak with an attorney in your area. An attorney can examine your estate and unique circumstances and help you choose which of these components relates to you specifically.
The will is the first step, and while it does not complete your estate plan – it is required in order to have an estate plan. Your will is a legal document that directs your assets to a specific party upon your death. You will also appoints your executor, which is your personal administrator who will distribute assets according to your instructions left in the will.
With a will, your estate passes through probate.
Trusts are legal arrangements. In a trust, you have the trustee, who holds the legal title to the assets or property inside the trust. Then, the trust has a list of beneficiaries who will receive assets in the trust at a specific time, typically after the trustee’s death.
With a trust, you have more control over the distribution of your assets. You can dictate when and how much your children or beneficiaries receive.
Power of Attorney
A power of attorney is a critical component to every estate plan – and one that is often overlooked. The party named in the POA acts in your place for financial decisions if you become incapacitated. The person you choose must be responsible, and someone you entrust to handle your financial matters.
A medical directive is separate from a power of attorney. It includes multiple documents, such as the healthcare proxy, durable power of attorney, and a living will. All these documents combined ensure that your wishes are considered if you become incapacitated and cannot make decisions on your own.
The health care proxy is the person who will carry out directions in your living will, such as denying life support or removing you from life support after so many days have passed.
Beneficiary designations are not in your estate plan. Instead, they are the appointments you make on your retirement account, investment accounts, and usually bank accounts. Check these designations annually to ensure they correspond with your beneficiary lists and modify them anytime beneficiaries change.
Hire an Estate Planning Attorney
Deciding which items you need for your estate plan is difficult, especially if you do not know the relevant laws of your state. While there are online guides and forms, these lack the complexity required to fully address your needs. Therefore, consult with an estate planning attorney in your area to ensure you have a complete estate plan. A complete plan is one that will work for you, protect you, and care for your loved ones, even when you cannot do it yourself.