Plan for the Future

What Are the Components of an Estate Plan?

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Review the basic components of a good estate plan and their benefits.

Will

What it does:

  • Directs who ("beneficiaries") receives property and assets after your death
  • Names who ("executor") you want to carry out those directions
  • Names who ("guardian") will care for minor children or other dependents

Benefits:

  • Is fairly straightforward to create
  • Can be changed during your lifetime
  • Makes it easier for your loved ones after you are gone
  • Gives you control over your legacy, including the people and things you care about

Trust

What it does:

  • Directs who ("beneficiaries") receives specific property and assets after your death
  • Names who ("trustee") you want to control the property and assets
  • Holds property and assets for beneficiaries

Benefits:

  • Avoids probate, the often lengthy process of proving a will's validity
  • Is private
  • Can control when you want people to inherit money or property
  • Some can be changed during your lifetime (revocable trusts)

Durable power of attorney

What it does:

  • Names who ("agent") can act for you on financial matters if you're incapacitated
  • Specifies how much authority named agent has and when it expires

Benefits:

  • Is flexible in terms of how much power you grant the agent and for how long
  • Ensures that someone you trust is making financial decisions for you when you can't

Health care power of attorney

What it does:

  • Names who ("agent") makes health care decisions for you if you're incapacitated
  • Specifies how much authority named agent has and when it expires
  • Gives named agent authority, in some states, to make post-death decisions about things such as consent to an autopsy, anatomical donations or disposition of bodily remains

Benefits:

  • Is flexible in terms of how much power you grant the named agent and for how long
  • Ensures that someone you trust is making medical decisions for you when you can't

Living will

What it does:

  • Details your wishes about provision, withholding or withdrawal of life-sustaining medical treatments if you are in a terminal condition or permanently unconscious

Benefits:

  • Gives you control over medical decisions, even if you are unconscious or incapacitated

Appointment of HIPAA representative

What it does:

  • Gives someone the authority to review and discuss your health information with your health care providers

Benefits:

  • Allows doctors and medical professionals to discuss your medical history and other important details about your health with a loved one

Beneficiary designation forms

What it does:

  • Names who ("beneficiary") will receive specific assets, such as life insurance policies, retirement plans and bank accounts
  • Specifies primary and secondary beneficiaries and what percentage of the asset each person receives

Benefits:

  • Covers assets that are not covered by your will
  • Gives you control over the portion of each asset each person receives

After looking over the basic components of an estate plan, you might be a little overwhelmed at all the different elements that make up a plan. Find out whether you need an attorney to create your plan or whether a DIY path might work for you.