If you have a will, then you’re off to a good start. About two-thirds of the adults in the United States haven’t taken the time to create one.
But an estate plan needs more than just a will. The will is like having only the foundation of a home. It’s essential, but you need at least four walls and a roof before considering it a house. A comprehensive estate plan is much the same way.
What should be in an estate plan?
Your will outlines how you want your assets distributed after you pass away and names an executor to handle your estate. If needed, you can also designate guardians to care for your minor children or other dependents.
In addition to your will, an estate plan should include a power of attorney (POA). This legal document allows you to name someone to handle your financial and legal affairs if you cannot. Your POA can be temporary if you plan to be out of the country for an extended period. Or, you can name someone as a durable POA in the event you become incapacitated. They would remain your POA until you recovered or passed away.
Advanced directives are also crucial as they outline your wishes for end-of-life care, including “do not resuscitate” or no feeding tubes. You can also name someone as a healthcare proxy to make medical decisions for you.
Separate from a will, beneficiary designations on life insurance policies, retirement accounts and investments ensure that those assets will go directly to the intended beneficiaries without needing probate.
A revocable trust is another valuable estate planning tool to avoid probate. It gives you control over your assets while you’re alive. They can be distributed according to the trust’s terms upon your death.
Other documents should also be a part of your estate plan, such as a letter of intent, a digital estate plan for your online accounts and tax planning strategies to minimize the financial burden for your heirs. It’s vital to work with someone who knows how to create a comprehensive, legally sound estate plan that meets your specific goals.