What Should Be In Your Estate Plan?

Peace of mind. This is a top reason most people list as a reason they want an estate plan.  But what does that mean? How do you achieve peace of mind in estate planning?  Well, the answer is actually simple.  You get good legal advice for an estate plan that achieves your goals and stay updated as things change.

Let’s start with the first part: get good legal advice for an estate plan.  But what does that entail? Every estate plan should include some “must-have items”:

• Will
• Revocable Living Trust
• Power of Attorney – Finances
• Power of Attorney – Healthcare (also referred to as a Patient Advocate Designation)
• Asset Alignment Documents

While the exact look or language of the above Estate Plan documents vary from state to state, these items are the foundation to any good Estate Plan. So, let’s take a brief look at what each document does.

The Will

In our office, we describe the Will as a “Funnel”.  You put things into the top of the Funnel, and it comes out the other side.  You can’t put things into the Funnel and carry them around – meaning the Will by itself cannot hold assets.  Instead, the Funnel represents the court process a Will must go through to actually work and are a death-document, meaning they will only work after you are dead.  Wills are essential parts of all Estate Plans because they name who gets your assets and who’s in charge of making sure that happens after you die.  For estate plans that have a revocable living trust (see below) the Will is an important back-up plan.

A Revocable Living Trust

People can often mistakenly believe that Trusts are too complicated. Instead, think of it this way: a Revocable Living Trust is like the little red wagon you had as a kid.  You put all your “treasures” in this wagon and carried it around with you wherever you went.  You also got to make the rules as to how other people could use your treasures.  Trusts provide greater flexibility and control to adapt to a variety of circumstances and often can include things like protecting the money you leave for family members from things like divorce, bankruptcies, or creditors.  They are both lifetime and death documents, meaning they work while you are alive and continue to achieve your goals after your death.

Powers of Attorney

You should have a, financial Power of Attorney naming a trusted person to assist in paying bills and handling finances in the event of your incapacity.  A Power of Attorney may be effective immediately or may spring into action when you become incapacitated.  A Power of Attorney can also help avoid the need for a formal conservatorship through the probate court, which can be expensive and time-consuming.  For long-term care planning, it is important that your Power of Attorney contain extraordinary powers, which allows your agents to protect your assets in the event you need a nursing home in the future.

Power of Attorney for Healthcare (also called Patient Advocate Designation)

Powers of Attorney for Healthcare allows you to appoint a trusted person to make medical decisions for you if you become incapacitated. This ensures that you have the person you trust in your corner to tell the medical staff what kind of medical treatment you want or don’t want.  This can avoid the need for guardianship through the probate court, which can be expensive and time-consuming.

Asset Alignment Documents

For any estate plan to properly work, the estate plan documents themselves are only part of the complete picture.  For your plan to work, you need to align your assets with estate plan.  In order words, the documents won’t work until you have your assets set up correctly with your plan.  This could involve a variety of items such as: real estate, bank accounts, life insurance, IRAs, 401ks, etc.  Signing the estate plan documents are only part of the process.

Stay Updated

For your estate plan to continue to work in achieving peace of mind, it has to be stay updated.  This means that as your life changes (your family, your health, your assets, the law, etc.) you need to keep your plan updated as well.  This aspect of estate planning is where most people often fail.  They got their estate plan done when their kids were little and haven’t touched it in 30+ years.  Achieving peace of mind requires that you have your plan reviewed and updated to ensure the plan still does what you want it to do.

Your Estate Plan – What’s Next?

If you do not have an estate plan already in place, or if you would like a second opinion on the documents you’ve already created – please contact our office to schedule your estate planning consultation. Contact us to start the conversation.