When people think about estate planning, they generally think about a will or a trust, detailing how they want their assets divided in the event of their death. This is certainly a vital component, but there is much more involved in a complete, quality estate plan.
Our recent blog posting described WHEN you might need to modify your estate plan, noting that your estate plan should be adapted to coincide with the transitions of your life. Our prior posting describes when and why you should look at making changes to your estate plan… but what all should be included in the estate plan to begin with??
Each individual's estate plan is different and tailored to their unique situation. However, in creating any quality, comprehensive estate plan, the following components should be considered:
1) Will: This is a legally binding statement which states who will inherit your property upon your death. Your will should appoint a legal representative (executor) to carry out your wishes and should name a guardian to care for your young children if both parents become deceased. In terms of property, there are limitations to what type of property can be covered by a will. Assets that are outside of probate (property in trust, life insurance proceeds, etc.) are not covered. Our estate planning attorneys can help you sort through these limitations and understand your options.
2) Consider a Trust: A trust is a fiduciary arrangement which allows a third party (“trustee”, often a bank or institution) to hold assets on behalf of a beneficiary. There are many different ways trusts can be arranged which detail when and how assets are passed to beneficiaries. Many people choose to hold their property in a trust to save time and expenses for their beneficiaries, minimizing estate taxes and allowing them to avoid going through probate court.
3) Power of Attorney (for finances): With a durable power of attorney, you may appoint someone you trust the authority to handle your property and finances should you become debilitated and unable to handle these matters on your own. This designated person is also referred to as your “attorney-in-fact”, though they don't need to have any legal background. If you don't have a durable power of attorney in place and there should become a need for someone to handle your financial affairs, the court has to go through the process of appointing someone. This takes time, may be expensive, and the court-appointed person may not be your preference, making it essential that you have this component as part of your estate plan.
4) Health Care Directives: A clear health care directive is essential to protect your wishes if you become debilitated and unable to make medical decisions for yourself. This includes a health care declaration (or “living will”), instructing health care providers about your medical wishes, such as preferences around life support. The health care directive also includes a power of attorney for health care, which involves appointing someone to make health care decisions if you become incapacitated and cannot make them for yourself. In Washington State, the Advance Directive combines your living will and durable power of attorney for health care into one document.
5) Final Arrangements: It is advised that you make your wishes known regarding what to do with your body when you pass away. You may detail your preference for burial or cremation, for example, and/or your wishes around organ and body donation.
Other components to consider when developing your estate plan may include:
- Life insurance considerations
- Covering funeral expenses
- Protecting your business if you are a business owner
- Beneficiary designations
- Understanding probate
- Management of your minor children's inherited property
- Guardianship considerations
Whether you are starting a family, nearing retirement, facing end of life decisions, or simply want to clarify your wishes and plan for the future, you need an experienced and compassionate estate planning professional to assist you in developing the plan that is best for your family.
Our estate planning attorneys are committed to understanding your unique situation and developing an estate plan that matches your needs and wishes appropriately. We provide all levels of estate planning services, from basic to more complex and everything in between. Please contact us today for a Free Consultation so that we may begin helping you plan for the future.