Most people do not realize that everyone over the age of 18 years already has an estate plan even if you don’t have a will. Washington intestate laws govern what happens to your things after death although, the plan that the state has laid out may not match your wishes. A properly drafted and executed estate plan will allow you to express your own intent and make sure all of your wishes are carried out after death.
There are 5 key elements of a good ESTATE PLAN:
A will is probably the first document you’ll think of when preparing your estate plan. This is the document that lays out who you want to take over your assets when you die and helps ensure that your assets are distributed properly when the time comes. If you are a parent with minor children, you can name guardians to care for your children.
Trusts are legal arrangements that hold assets on behalf of a beneficiary or beneficiaries. There are many different types of trusts, and the person setting up a trust can dictate precisely how and when beneficiaries receive the assets in the trust. Revocable trusts can help your estate avoid probate, while irrevocable trusts can help limit exposure to estate taxes. It is also possible to create a trust inside of your will, which is known as a testamentary trust. However, the assets inside of a testamentary trust aren’t exempt from probate.
Financial Power of Attorney
A power of attorney allows you to designate someone to step in and manage your finances should you become incapacitated. This document is especially important for singles since there is no spouse to immediately jump in to serve in this role. If you are single and don’t have a power of attorney designated, a court will decide who should serve as your guardian, and it’s possible that the court may select someone that you may not view as the ideal candidate.
Health Care Directive
Health care directives function similarly to a power of attorney. The difference is that while a power of attorney handles your financial decisions, health care directives handle your medical decisions. There are two main documents in this category. A living will is a written statement that provides instructions for your health care should you become incapacitated. The second document, a health care proxy designating a person who will make medical decisions on your behalf if you become incapacitated. If your family members disagree about your care, it’s good to have these documents in place to ensure your wishes are carried out.
Beneficiary designations are found on retirement accounts and life insurance policies. These designations dictate who will receive benefits when you pass, and they supersede what’s in your will, making it important that you review your designations on a regular basis. We recommend reviewing your beneficiary designations at least once a year.
It isn’t enough to simply incorporate these elements into your estate plan—you’ll also need to review them on a regular basis to help ensure your needs will be met as your life changes. And since many of these elements involve complicated legal documents, it’s a good idea to take the time to work with an estate planning attorney and your financial advisor so that everything is completed accurately and that all of your wishes will be carried out when the time comes.