5 key parts of an effective estate plan

On Behalf of | Mar 31, 2022 | Estate Planning

Creating an estate plan gives you control over your legacy when you die. You can provide for those who depend on you, control what happens to your property and even make gifts to charitable causes.

Your estate plan can also help if you experience a medical emergency, like a brain injury that leaves you in a coma. Whether you are about to create your first estate plan or expand on a basic plan made years ago, there are five essential inclusions that most people need for a well-rounded estate plan.

A will

Considered by some to be the only estate document that matters, a will includes instructions regarding your property and also guardianship designations if you have responsibilities for minor children or disabled adults. Leaving directions about what to do with specific assets or the remainder of your estate in a will is an essential part of estate planning.

Powers of attorney

If a medical emergency leaves you unconscious or you develop dementia as you age, powers of attorney allow you to name people you trust to take care of you.

Some people create medical powers of attorney authorizing someone to manage their health care. Others create financial powers of attorney so that someone they trust can access their bank accounts and financial statements during their incapacitation.

Advance medical directives

If you cannot talk about your medical preferences, then others will have to make decisions about the care that you receive. You can leave instructions about your preferences regarding issues like pain management, anatomical gifts and life support by creating an advance medical directive, possibly in conjunction with a medical power of attorney.

Long-term care plans

If you have millions of dollars in savings or personal property, then you may be able to afford the cost of health care as you age, no matter what happens with your health. For many middle-class adults, advanced planning is the only way to pay for nursing home support when they grow older.

Changing how you hold certain property or creating a trust will protect your assets from creditors later and potentially help you qualify for Medicaid.

Accurate beneficiary designations

If you have a life insurance policy and your will says it should go to your children, that is not always what happens.

If you named your spouse as the beneficiary on the documents for the policy itself, that plan will have more legal authority than your will. It is important that you check insurance policies and any account with a transfer on death designation to ensure that the instructions for the policy or account match the instructions you provide in your will.