Elements of a Good Estate Plan

It is critical that there is a plan in place which ensures that, upon your death, others are taken care of in a manner which you desire.  Good estate plan can avoid long and lengthy probate proceedings, where the court may have control over the disposition of your property.  A complete estate plan should consist of several documents: will, financial power of attorney, medical directives, and trusts.

 

Will

A will is a written document which directs the manner in which your property is to be distributed upon your death.  A properly constructed will may reduce the risk of a lengthy, and potentially expensive, administrative dispute.  However, only property considered as “probate property” can pass through a will.  Some types of property which passes outside of the will include: property with a named beneficiary (401(k) plan or an IRA), property jointly owned with another, property in trusts.

 

Financial Power of Attorney

Power of Attorney is a document which identifies a person who is to make all of your financial decisions if you become incapacitated.  Failure to have a person designated with power of attorney could lead to a court assigning a guardian who will have authority to take care of your financial matters.

 

Medical Directive or Healthcare Power of Attorney and Living Will

Medical directive is a document where a person is named as a healthcare decision maker in an event you cannot make decisions for yourself.  A person can also create a living will, which outlines your desire for medical treatment should you be in a permanently unconscious state.

 

Trust

In a trust, a 3rd party holds legal title to the desired property for another person (beneficiary).  As the creator of the trust, you can decide how and when your property will be distributed.  Creation of a trust avoids probate, and could create tax advantages for you and the beneficiary.  Trusts are usually necessary if you are worried about 3rd party oversight of your property upon your death.