Creating an estate plan means creating a variety of tools that allow you the broadest range of potential benefits. While every estate plan has to be uniquely tailored to fit the needs of the person creating it, the foundational tools your plan will use will almost certainly be the same tools that almost every plan relies upon. Without these foundational elements, no estate plan is complete.
Foundational Estate Planning Tool 1. Your last will and testament.
A will is the estate planning device with which most people are familiar. Your will, sometimes known as a last will and testament, is simply a document in which you express your inheritance decisions.
Do you want to leave equal inheritances to each of your children? Do you want to create a trust that will hold that property until your young children have become old enough to manage it? Do you want to name an executor who will manage your estate after you are gone?
Through your last will and testament, you can answer each of these questions, and more.
Foundational Estate Planning Tool 2. Your revocable living trust.
Even though a last will and testament is one way to make inheritance decisions, it isn’t the only way. A revocable living trust is a popular estate planning tool that not only allows you to make inheritance choices, but also does so in a way that is far more flexible and cost-effective than if you make the same decisions through your will. A revocable living trust, unlike a will, has the benefit of allowing your estate property to transfer to your heirs outside of probate. Probate can pose a significant expense, and take a lot of time. Using a revocable living trust as your primary inheritance vehicle will allow you to minimize probate as much as possible.
Foundational Estate Planning Tool 3. Your durable power of attorney.
Not every part of your estate plan focuses on what happens after you die. Many parts, such as your durable power of attorney, will focus on what you want to happen should you become incapacitated. Through your durable power you can select an agent. The agent will have the legal authority to manage your property and make decisions for you should you lose your mental capacity.
Foundational Estate Planning Tool 4. Your advance medical directives.
Advance medical directives are tools through which you can make medical decisions that will apply should you lose your ability to make choices. These tools include living wills and medical powers of attorney. When you create advance directives, your doctors, and your representatives, will have to abide by the choices you make.