While many people focus on writing a will, it is only one of the estate planning options available to you. A comprehensive estate plan can use a variety of different documents to establish your wishes and provide for your loved ones.
A will is the most common estate planning document. It addresses the distribution of all the property in your name at the time of your death, appoints an executor to carry out those wishes and names the people who will inherit. The assets addressed in a will go through the probate process.
Wills also allow you to name a guardian for your underage children. This makes them especially important for new parents.
Trusts are legal arrangement in which a person or institution holds property and distributes it to beneficiaries according to guidelines set down by donor. Because the trust owns property rather than the donor, they are commonly used to avoid probate. Trusts usually work alongside wills to create an estate plan that achieves a person’s particular goals.
One particular advantage of using a trust is that this document can provide for loved ones with special needs while allowing them to benefit from government support. Because donors place property in trust rather than leave it to their loved ones outright, this property will not count toward income or asset limitations placed on those who receive disability benefits.
Power of attorney
Many people plan for their death, but it is just as important to plan for accidents or illness that may incapacitate you. A power of attorney allows you to appoint a person to make financial or medical decisions on your behalf. This document allows your representative specific permissions, and you can create multiple powers of attorney to appoint different agents for different legal needs. You can also name multiple agents so that two people must act together to make decisions on your behalf.
While naming a power of attorney for health care decisions is one way to prepare for your end-of-life medical care, it is only one document of the many you can choose from. You may also name a health care proxy to make decisions on your behalf or establish a living will to name the terms in which you should or should not be placed on life support.
Your estate plan can contain a variety of different documents depending on your needs, and it can be helpful to speak to an attorney about your planning goals. They can help you navigate your options and create an estate plan that supports your wishes.