What Is Included in an Estate Plan
There was a time when the concept of estate planning was no more than having a will and, if you were married, using a joint title to own property with a spouse. Frankly, back in the day, the notion of having an estate plan conjured up images of aristocratic family members elegantly poised in a hushed setting waiting to hear Aunt Lydia's attorney read her will aloud, each wondering who was getting the seat on the New York Stock Exchange and who the property in the Hamptons. Life has become much more complex for a greater number of people. People are mobile, moving from job to job, sometimes from country to country. People live together for long periods of time without benefit of marriage, get married, get divorced, remarry, have children, don't have children, acquire stepchildren, have half-siblings. The relationship permutations are endless, and endlessly challenging. Changes in tax laws, nontraditional and blended families, and people living longer and healthier lives have all contributed to a need for more structured planning of distribution of assets.
Plans for the care and education of younger children may need to be factored into an estate plan. If you are responsible for young children when you die, these children might still need to be provided for before reaching independence. Monies would need to be allocated for this contingency before the balance of the estate could be determined.
An estate plan does not need to be a terribly complicated undertaking. It may include some or all of the following, depending on your individual circumstances:
Will — a witnessed legal document in which you state how you want your assets to be distributed. This is where you appoint a guardian for your child and name an executor for your estate.
Living trust — a tool to relieve your survivors from needing to process your will through probate court
Health care directive — instructions for the kind of medical care you wish to receive if you are unable to express your intentions yourself
Health care power of attorney — transferring authority to a person of your choosing to make health care decisions on your behalf
Financial power of attorney — gives the power to a person whom you trust implicitly to make decisions for you regarding your finances and property if you are unable to do so
Beneficiary forms — in the event of your death, naming beneficiaries for your retirement funds, annuities, and insurance policies. This smoothes the way for these assets to go directly to your heirs without needing to be processed through probate court.
Directives for caring for young children — names guardian(s) for your children and outlines how you want them to be educated, etc., while protecting their financial stake in your estate
Business succession plan — spells out what will happen to your business (e.g., who will inherit). Or you may instead have a buy/sell agreement in place with a worthy competitor to make sure your heirs get a fair price.
It is a good idea to get the basics completed in your early years. Over time, as your life evolves, you can add or amend documents to provide for changes as they develop. The key thing is to not be frightened about getting your wishes down on paper so that others will be able to carry them out for you. Remember: Not to decide is to decide. In this case, by not deciding you will be letting the government make the decisions.
