Estate Plan Essentials

Estate plan essentials include those elements that make up the primary parts of an estate plan; they are the basics and can be expanded upon depending upon the specific needs of your family, health, and assets.

An estate plan is an organized and written instruction manual for your personal and financial affairs in order to deal with the possibility of mental incapacity or death.

Typically, estate plan essentials fall into two categories and include four to five essential legal documents…

Will-Based Estate Planning

This is best in situations where your family and financial situations do not warrant the need for a revocable living trust. In will-based estate planning, your plan will include the following four essential legal documents:

Last Will and Testament – typically contains a detailed list of instructions as to how your property should be distributed after you die and, if you have minor children, who will be designated a guardian for those children.

Advance Medical Directive – also referred to as Medical Power of Attorney or a Designation of Health Care Surrogate, this document allows you to designate a health care agent to make medical decisions for you if, for any reason, you are unable to make them for yourself. It can also designate an individual to serve as your guardian or conservator in the event a court determines that you have become mentally incapacitated.

Living Will – includes a written set of instructions to your physician as to whether you want to receive life-sustaining procedures if you have been diagnosed with a terminal condition, end-stage condition, or are in a persistent vegetative state. It also gives guidelines for your family members to follow if you become terminally ill.

Financial Power of Attorney – this document allows you to delegate to a chosen person the ability to manage assets that are titled in your individual name, including retirement plans, assets titled in joint names as tenants in common, and more. It can also be used to transfer assets into your revocable living trust if you become mentally incapacitated before the trust has been fully funded.

Financial powers of attorney come in two forms:

  • Durable Power of Attorney: goes into effect as soon as you sign it
  • Springing Power of Attorney: which only goes into effect after you have been declared mentally incapacitated
Estate Plan Essentials

Trust-Based Estate Planning

Trust-based estate planning is used when you have a more complicated or sophisticated family or financial situations. This type of plan will include five important legal documents:

Pour Over Will – a type of last will and testament that is used as a safety net to catch assets that you did not transfer into your trust prior to your death and puts those missed assets into your trust after your death. This type of will contains minimal instructions as your revocable trust is the main document that will govern your estate plan.

Revocable Living Trust – this document allows assets held in the name of your revocable living trust at the time of your death to avoid probate and contains detailed instructions for three important eventualities of your life:

  • What happens while you are alive and well
  • What happens if you become mentally incapacitated
  • What happens after your death

Advance Medical Directive – also referred to as Medical Power of Attorney or a Designation of Health Care Surrogate and similar in design to an Advance Medical Directive in a will-based estate plan.

Living Will – medical directive similar in design to the document in a will-based estate plan.

Financial Power of Attorney – legal directive similar in design t