The will, formally known as a last will and testament, is just one part of a complete estate plan, explains the article “Essential components of an estate plan” from Vail Daily. Consider it a starting point. A will can be very straight-forward and simple. However, it needs to address your unique situation and meet the legal requirements of your state.
If your family includes grown children and your goal is to leave everything to your spouse, but then make sure your spouse leaves everything to the children, you need to make sure your will accomplishes this. However, what will happen if one of your children dies before you? Do you want their share to go to their children, your grandchildren? If the grandchildren are minors, someone will need to manage the money for them. Perhaps you want the balance of the inheritance to be distributed among the adult children. What if your surviving spouse remarries and then dies before the new spouse? How will your children’s inheritance be protected?
Many of these questions are resolved through the use of trusts, another important part of a complete estate plan. There are as many different types of trusts as there are situations addressed by trusts. They can be used to minimize tax liability, control how assets are passed from one generation to the next and protect the family from creditor claims.
How a trust should be structured, whether it is revocable, meaning it can be easily changed, or irrevocable, meaning it is harder to change, is best evaluated by an experienced estate planning attorney. No matter how complicated your situation is, they will be able to guide you through proper considerations to create you plan.
A memorandum of disposition of personal property gives heirs insight into your wishes, by outlining what you want to happen to your personal effects. Let’s say your will leaves all of your assets to be divided equally between your children. However, you own a ruby ring and have a beloved niece who loves the ring as much as you do. By creating a memorandum of disposition, you can make sure your niece gets the ring, taking it out of the general provisions of the will. Be mindful of state law, however, as some states do not allow the use of such a memorandum of disposition.
Other components of an complete estate plan are Power of Attorney Documents. You will need a Durable Financial Power of Attorney, giving another person the right to act on your behalf if you should become incapacitated. This is often a spouse, but it can also be another trusted individual with sound judgment who is good with handling responsibilities. Make sure to name a back-up person, just in case your primary POA cannot or will not serve.
A Medical Power of Attorney gives a named individual the ability to act on your behalf regarding medical decisions if you are incapacitated. Make sure to have a back-up, just to be sure. Failing to name a back- up for either POA will leave your family in a position where they cannot act on your behalf and may have to go to court to obtain a court-appointed guardianship in order to care for you. This is an expensive, time-consuming and stressful process, making a bad situation worse.
These are some of the main components of a complete estate plan that an experienced estate planning attorney will discuss with you.
Reference: Vail Daily (Feb. 15, 2022) “Essential components of an estate plan”
Suggested Key Terms: Living Will, End-of-Life Care, Incapacitated, Guardianship, Power of Attorney, POA, Will, Last Will and Testament, Memorandum of Disposition, Assets, Trust, Irrevocable, Revocable, Estate Planning Attorney, Surviving Spouse
