Estate planning is just giving some forethought to what will happen to your estate after you die and also planning so that you can have the necessary assistance to carry out your day to day affairs if you become incapacitated. That’s done through appointing someone as your agent or your power of attorney. People are surprised by how complicated it can be to transfer even what they would consider a very small estate. It can be just as complicated as a multimillion dollar estate. Many people haven’t really thought about retirement accounts, stocks, bonds, or money that they inherited as part of the assets that they are going to transfer.
What Are The Basic Items Of A General Estate Plan? What Does Each Item Do?
I sit down with each person or couple and ask them a lot of questions about what their assets are, what form they’re in, whether they own real property, if it is all in this state, whether they own any interest in property in another state, what kind of bank accounts they have, any life insurance policies they hold, and much more. The first document to consider is a will. The will designates who is going to receive the various assets in your estate. It also is going to name an executor and possibly an alternate executor, who’s going to take care of your estate. It’s going to outline what the powers of the executor are and whether you want to give them broad powers or very limited powers. A will can also include a testamentary trust that gives provisions for beneficiaries who might be underage.
The next document to consider is a medical power of attorney. It appoints an agent and possibly an alternate to act on your behalf and assist you in making medical decisions about your treatment. It does have certain limitations, but it’s an important document to have. Along with that should be a statutory durable power of attorney, which also appoints an agent and an alternate that you want to act on your behalf and assist you through a list of powers that can be limited, or you can give all those powers. It can cover anything from real property transactions, banking, or insurance to dealing with government benefits.
Another important estate planning document is called a directive to physicians, also sometimes referred to as a living will. It gives you the opportunity to state what kind of care you want in the event that you have a terminal condition or a condition that you’re not expected to recover from. It can often be beneficial to your family members because it lets you tell them what kind of care you want in that situation. There’s designation of guardian for yourself, should you need to have someone pursue being your guardian down the road, and designation of guardian for your minor children. Sometimes, the facts indicate that there should be a designation of a person to control the disposition of remains.
Obviously, a trust can be part of an estate plan, including a revocable living trust or a special needs trust. Those are tailored to what we’re trying to accomplish with that estate plan. There can be other documents, like a Ladybird deed or a transfer on death deed, which are two deeds that allow you to control and designate who’s going to receive your property when you die. They both have different benefits and disadvantages, depending on the situation.