7 Critical Components in Any Estate Plan

When it's time to start thinking about creating an estate plan, you should focus on drafting a plan that makes sense for you and your family. At its core, an estate plan is put into effect to secure your family’s financial future in the case of sudden incapacitation or death. Without a plan in place, your property is subject to the intestacy laws of your area.

One of the great misconceptions about estate planning is that it's only necessary for those upper-class property owners with several vacation homes, luxury vehicles, and precious family heirlooms when nothing could be further from the truth. A comprehensive estate plan will benefit anyone willing to invest the time and effort into writing one. With an estate plan, you can provide for your family after your passing, ensure that your loved ones receive your property in a timely fashion, and can even help you prepare for retirement.

Even if your assets and wealth are limited, you’ll still want to avoid family disputes over any assets you do have. To mitigate any tensions between family members battling for ownership over your property, you’ll need to consult a law firm like wh Law, a North Little Rock law firm. These legal professionals will guide you through the paperwork process and address any contestations of your will or trust.

If you’re unfamiliar with the estate planning process, you’ll need to understand these seven key components necessary to give your estate plan proper standing.

A last will and testament

Your last will and testament is a legal document that serves two primary purposes. Firstly, it designates how and to distribute your remaining valuables to if you’re declared deceased or incapacitated. Secondly, it delegates a loved one with the responsibility of making sure your will is carried out appropriately after your passing.

Don’t underestimate the importance of a last will and testament. Without the existence of a will, your family may weaponize your assets in a furious battle between your loved ones and the state where you reside.

Power of Attorney

Should you become incapacitated in any way, you’ll need someone who is mentally and physically capable of making legal and financial decisions on your behalf. A power of attorney document designates to whom you grant certain authorities. Should you not assign someone as your power of attorney, the responsibility for making decisions on your behalf would fall on the shoulders of the courts.

Advanced Healthcare Directive

While most would prefer to avoid imagining the worst-case scenario, there’s always a chance you could find yourself injured by a severe health condition. Should that happen, you’ll want to elect someone you trust to make healthcare decisions on your behalf.

The best way to make sure you’ve granted authority to your proxy is to acquire and sign an advanced healthcare directive. You can collect the medical power of attorney forms from your state. Once you’ve picked up these forms, you’ll need to choose a healthcare agent, fill out the forms, and distribute copies to your loved ones, physicians, and healthcare agent.

Designated beneficiaries for non-probate assets

There are certain assets that the courts don’t require probate, including those assets you didn’t mention in your will. If you make a list of beneficiaries ahead of time, your non-probate assets will be distributed based on your wishes. Otherwise, the courts will have the authority to make such decisions for you if you cannot speak for yourself.

Letter of Instruction

If you have minors under your care, a letter of instruction allows you to notify the courts of your plans and desires for your children if you’re unable to care for these minors in the event of a traumatic accident or your unexpected death. This document addresses matters such as schooling and specifies who you deem a suitable choice to raise them. While this isn’t a binding letter, it provides the courts some direction in the decisions they need to make in response to your death or incapacitation.

Nominate a guardian for minor children

In anticipation of your passing or significant incapacitation, you’ll need to decide ahead of time who you want to act as a guardian for your children. Whomever you designate should be a trusted adult that you know will always serve your children's best interest. It's also vital that they have the financial resources they’ll need to provide ample support.

Nominate an executor

After performing the hard work necessary to create an estate plan, you’ll want to make sure someone you trust is around to assure your beneficiaries honor your wishes. If you have someone in mind who could fulfill these executor duties, you can legally nominate them as your estate executor.

Conclusion

As you can see, there are a lot of moving parts to the estate planning process. With this in mind, it’s highly recommended that you hire an attorney to help you address all legalities. Estate planning is your opportunity to dictate how you want people to handle critical aspects of your life when you can no longer make those decisions.

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Posted - 09/11/2020

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