Many people think an estate plan is just for the wealthy and having a will should be sufficient. However, there are many things to consider besides the distribution of your assets after you pass away.
Why do you need more than a will, and what should you include in your estate plan?
Essential components of every estate plan
An estate plan is a set of legal documents outlining how you want your assets and affairs handled during your lifetime and after death. While every estate plan is different based on individual needs, here are some things that should be a part of all plans:
- Wills can designate guardians for your minor children in addition to specifying the distribution of your assets after you die.
- Powers of attorney (POA) allows you to designate who you want to handle your financial affairs and make medical decisions on your behalf if you become incapacitated.
- Advance directives outline your wishes regarding end-of-life care.
- Beneficiary designations for assets such as life insurance policies and retirement accounts can prevent those assets from going through the probate process.
- Trusts allow you to transfer your assets to a trustee to manage for the benefit of a third party. Setting up trusts is another method to avoid probate.
- Letters of intent aren’t legally binding but can provide instructions regarding specific assets and funeral arrangements.
Creating an estate plan can feel overwhelming as you will need to inventory your assets, including real estate, investments, insurance policies, and valuable personal property. However, by creating one, you can provide peace of mind to you and your family.