Crucial Elements to Include in an Estate Plan
Posted: November 13, 2024
Here are some of the most crucial elements to include in an estate plan, especially for older adults:
Create a Will or Trust
A will ensures your assets go to your chosen beneficiaries, while a trust can help avoid probate and offer more control over asset distribution. Trusts can also reduce estate taxes, protect your assets from creditors, and help manage assets if you become incapacitated.
Establish Durable Powers of Attorney
Assigning a durable power of attorney (POA) for financial matters allows someone you trust to handle your financial affairs if you're unable to do so. Consider also a healthcare POA for medical decisions, ensuring your healthcare wishes are honored in case of incapacitation.
Prepare an Advance Healthcare Directive
An advance directive outlines your preferences for medical treatments, end-of-life care, and life support measures. It provides guidance to loved ones and healthcare providers if you can’t communicate your wishes.
Update Beneficiary Designations
Regularly review and update beneficiaries on accounts like life insurance, retirement accounts, and investment accounts. This ensures that assets pass directly to your chosen individuals without going through probate.
Consider a Living Will
A living will can be part of your advance healthcare directive and specify your preferences for life-sustaining treatments if you become terminally ill or permanently unconscious.
Set Up Guardianships or Provisions for Dependents
If you have minor children, grandchildren, or dependents with special needs, set up guardianships or trusts for them. Special needs trusts can help manage resources without jeopardizing eligibility for government benefits.
Minimize Estate and Inheritance Taxes
With the help of an estate planner or financial advisor, explore strategies to reduce potential estate or inheritance taxes. This could include gifting strategies, charitable donations, or irrevocable trusts.
Document and Organize Important Information
Keep a secure record of all financial accounts, insurance policies, and essential documents. This includes login credentials, digital assets, and instructions on accessing your digital presence.
Choose an Executor and Trustee
Select responsible and trusted individuals as executors for your will or trustees for any trusts. They will manage and distribute your assets according to your wishes, so choose people capable of handling these duties with care.
Review Your Estate Plan Regularly
Life changes—such as births, deaths, marriages, divorces, and significant asset changes—warrant a review of your estate plan. Periodically check that all documents align with your current wishes and circumstances.