Essential Elements of an Estate Plan

A June 2021 Gallup poll showed that less than half of adults in the United States have a will, a key element in an estate plan.

A lot of people understand how important it is to create the legal documents necessary for their beneficiaries. They might put it off because it sounds like a great deal of work. Often they don’t want to think much about their own mortality.

Statistics show that older generations are more likely to have an estate plan in place. The truth is that all adults should have one. It’s not difficult or complicated and it can be updated as your life situations change.

Without planning for the possible scenarios, your wishes for your beneficiaries might not be carried through. Your assets would be divided according to state probate laws, which may not be amenable with your circumstances. 

The good news is that a comprehensive estate plan is not difficult to create and it will give you peace of mind that your family is taken care of according to your wishes.

Four Key Elements of an Estate Plan

Your life is unique. You have your own financial and family situation and things can often change over the course of time. Estate plans can be created specifically for your needs at the moment. They can also be amended as things in your life evolve.

The fact that your estate planning is individual to your family doesn’t make it more time-consuming. Depending on your scenario, there may be more complex financial structures to consider.

By the same token, a straightforward financial and family situation will mean a far less complicated estate plan. The ideal is to make sure the structure you use fits your own family’s best interest.

There are four key elements in any estate plan:

• A Living Trust. You can create a revocable or irrevocable living trust to protect assets and make sure that they transfer smoothly to the trustee after death. Living trusts can be created to avoid probate or inheritance tax.
• A Will. A will designates possessions after your death. This might include property not in a trust, jewelry, personal items, bank accounts, and other financial assets.
• Power of Attorney. A durable power of attorney gives an individual power to oversee your personal and financial decisions in the event that you cannot. This is often used in cases of advanced age and illness, and as a safety precaution to protect you in the event of an accident.
• A Health Care Proxy. A health care proxy can make all of the health care decisions for a person who is not capable of answering for their care. 

How to Develop Your Estate Plan

The four key elements of an estate plan are often used, but not in every case.

Trusts may be used as an avenue to keep assets safe from creditors, avoid probate, and even lay out financial support for family members who have special needs. Your situation may not call for this scenario. A husband and wife, for example, may simply co-own property so that it passes directly to the surviving spouse without probate. 

A will is necessary to avoid probate for items not designated to a trust. State probate laws can be surprising and may not reflect the best interest for your own family. 

Estate planning is a necessary step for every responsible adult. Contact us today to get your estate plan in place.