Once you decide that you are no longer going to procrastinate about estate planning you are going to ask yourself exactly what you need. With this in mind we would like to share the various different components that are contained within the typical estate plan.
Transfer of Financial Assets: Simple Wills
Clearly, arranging for the future transfer of your financial assets is going to be part of the equation when you are planning your estate. The first document that may come to mind when you are talking about asset transfers would be the last will.
With a simple last will you can indeed state your final wishes with regard to the distribution of your resources. When you create the will you should also include the choice of an executor.
Instructions that are contained within the last will are not going to get carried out by themselves. You need a human being to actually do the legwork, and this individual is the executor or executrix. (An executrix is a female estate administrator).
The executor will be guiding the estate through the process of probate. The estate must be probated before the heirs to the estate receive their inheritances. This process takes place under the supervision of the probate court.
If anyone wanted to contest the will they would present their arguments during the probate process.
Revocable Living Trusts
Some individuals choose to arrange for asset transfers via the creation of revocable living trusts. With these devices you as the grantor of the trust retain control of the funds while you are still alive and of sound mind.
You can change the terms of the trust or revoke it entirely.
When you are creating the trust you name a trustee who would manage the funds that have been placed into the trust after your death or incapacitation.
You also name a beneficiary who would receive distributions out of the trust after your passing. These distributions would be made in accordance with your wishes as stated in the trust agreement.
Advance Directives for Health Care
You should also have advance directives for health care. A living will is one of these directives. With a living will you record your preferences regarding the potential utilization of life-sustaining measures such as artificial nourishment and hydration.
A health care proxy is also recommended. With this document you name someone to make medical decisions in your behalf if you become unable to make them for yourself.
Durable Power of Attorney
Financial decision-making may also become necessary. To choose a financial agent you can execute a durable power of attorney. Unlike standard powers of attorney, this type of power of attorney remains in effect even after the grantor becomes incapacitated.