What are the Estate Planning Essentials?

POSTED ON: August 5, 2021

If you want loved ones to remember you fondly, tackle your estate planning tasks. Your heirs will thank you for not leaving a legal mess to sort out.

What are the Estate Planning Essentials?

There are eight estate planning documents that can help you get your affairs in order. According to msn.com’s recent article entitled “8 Documents That Are Essential to Planning Your Estate,” if that sounds like a lot of work, know that you may not need every document. Ask an experienced estate planning attorney about what is wise for your situation.

  1. Will. A will is definitely one of the estate planning essentials.  It specifies what will happen to your assets and designates an executor who will be in charge of following your directions. Your will can also nominate guardians for those under your care, including minor children. When it comes to pets, many states allow you to provide assets for their care. Without a will, a probate court will name an executor for your estate.  A will that has a trust built into it is called a “testametary trust”.  A testamentary trust can accomplish many of the purposes of a living trust, but it does not avoid probate.
  2. Revocable Living Trust. A living trust is another tool for passing assets to heirs, while avoiding potentially expensive and time-consuming probate proceedings. You designate a trustee who will manage the property placed in the trust. Unlike a will, a trust can be used to distribute property now or after your death.
  3. Up-to-Date Beneficiary Designations. When you purchase life insurance or open a retirement plan or bank account, you typically must name a beneficiary, who is the person you want to inherit the proceeds when you die. These designations take precedence over instructions in a will. Be sure to review and update these designations, when your life changes.  These are also one of the estate planning essentials.
  4. Durable Power of Attorney. A power of attorney is one of the estate planning essentials.  It lets you to appoint an individual to act on your behalf, financially and legally, if you are unable to make decisions.
  5. Health Care Power of Attorney and a Living Will. Another one of the estate planning essentials.  To be certain that someone can make medical decisions for you if you become incapacitated, ask an experienced estate planning attorney to help you draft a health care power of attorney, which is also known as a durable health care power of attorney or health care proxy. This is unlike a durable power of attorney discussed above for financial and legal affairs. A living will enables you to explain in advance of death what types of care you do and do not want if you cannot communicate your wishes. This document states your health care preferences and is totally different from a conventional will or living trust, which deals with property.
  6. Digital Asset Trust. You can use a digital asset trust to determine what to do with your electronic property, including your computer hard drive, digital photos, information stored in the cloud and online accounts. Create a separate list of your passwords.
  7. Letter of Intent. If you want to leave any instructions, requests, or important personal or financial information that does not belong in your will, write a letter of intent or a letter of last instruction. This letter can state your wishes for things you hope will be done, such as instructions about how you want your funeral or memorial service to be performed. This letter does not have the legal weight of a will.
  8. A List of Important Documents. This is definitely one of the estate planning essentials.  It makes certain your family can locate everything that you have prepared. Make a list of documents, including where each is stored. This should include the following:
  • Birth and adoption certificates
  • Life insurance policies
  • Annuities, pension or retirement accounts
  • Bank accounts
  • Real estate deeds; and
  • Stocks, bonds and mutual funds.

It is also helpful for your heirs to include a list of bills and accounts, including contact information and account numbers for each one, so your executor can settle and close these accounts.

To learn more about estate planning topics, read these articles: What’s the Best Thing to Do with an Inherited House? and How Does an Inherited IRA or 401(k) Work? and Must I have ‘Prince’-like Riches to Need a Will? and Do I Have to Pay Deceased Loved One’s Taxes?

To discuss the estate planning essentials today, BOOK A CALL with Ted Vicknair.

Reference: msn.com (June 18, 2021) “8 Documents That Are Essential to Planning Your Estate”

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