When people think of an estate plan, the terms will and trust may come to mind. While those documents are certainly part of an estate plan, they are not the only ones to consider including.
Will and trust
A will specifies a person’s wishes for how their assets are distributed after their death. The person who creates the will can name beneficiaries and list who they would like to manage their estate. A will goes through the probate process.
A trust holds and manages assets for the beneficiaries. There are several types of trusts, including revocable living trusts and charitable trusts. A trust can provide flexibility and some people choose it instead of a will because it avoids probate.
Other documents
In addition to the will or trust, it’s important to consider including a power of attorney (POA) for finances and a POA for healthcare in the estate plan. A POA for finances allows an agent to make financial decisions for the person creating the POA.
A POA for healthcare designates a person to make healthcare decisions if the person creating the POA is unable to. These documents are valid while the person is living and can usually be changed.
It’s also a good idea to review the beneficiaries listed on life insurance policies, bank accounts and other retirement accounts to ensure those align with the estate plan.
Also, if the person creating the estate plan has minor children, they may want to consider naming a guardian who can care for them. The estate plan should be updated periodically, especially when there is a marriage, children are born into the family or if their finances change.
There are estate planning options to meet a variety of needs.