An estate plan is a collection of documents mapping out plans for your assets and more after you pass.
Every estate plan is different and should cater to your specific needs. However, you will find some basic documents in most.
What documents can you include?
There are five components in most estate plans. They include:
- Wills and trusts serve a similar purpose, which is generally to layout asset distribution. However, they have distinctive differences.
- A living trust lays out your plans for medical treatment should you become unable to make those decisions.
- Beneficiary forms list the beneficiaries of certain financials, such as bank accounts and life insurance policies.
- A letter of intent is correspondence to your executor explaining your wishes, often including plans for your funeral and burial.
- Powers of attorney documents name the individual or party you wish to act on your behalf when you are incapacitated.
Should you decide to change the beneficiaries in your will, remember to change them in your beneficiary forms as well.
What is the difference between a will and a trust?
Both wills and trusts detail what you plan to do with your assets. However, a will has to go through the probate process. A trust avoids probate court and can take effect before you pass away.
Anyone who wants to plan what happens to their assets needs an estate plan. Keep in mind that estate plans have nothing to do with how much you have and more to do with what you want for your assets and your family.