What Are the Components of an Estate Plan?

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