An ideal estate plan describes your wishes as clearly and completely as possible. This helps others know your requests in the event you’re incapacitated or you pass away. You may even need several types of documents to cover all your bases.
- A will provides the most widely recognized tool for expressing your final wishes.
- An advance care directive is a formal name for a living will. You can use one to specify the course of your medical treatment at times when you can’t make choices for yourself.
- A health care proxy lets you designate someone to make choices about your medical care when you are unable to do so.
- Statements of intent allow you to layout your philosophy and preferences for the guardians and trustees who will be asked to carry out your wishes.
The effectiveness of your estate plan rests in large part on the people you select to take over for you. Make sure you think carefully about the roles you’ll need to have filled. You’ve spent a lifetime building your estate, so you’ll want to take careful steps to ensure it’s taken care of in your absence.
- The executor is responsible for carrying out the provisions of your will.
- A trustee manages a trust you created and enforces the rules of that trust
- A guardian is a person who assumes legal responsibility for your children and any other dependents in your absence.
Careful planning may be especially important to conserve your assets and lessen the effects of taxes. To do this, many people use trusts in their estate plans. A trust is a legal arrangement that allows a third party — the trustee — to hold and direct assets on behalf of a beneficiary. Some trusts can be altered or even abolished by you if your needs change (revocable trusts). Other trusts cannot be changed in any way once they are implemented (irrevocable trusts).
- A living trust allows you to remain both the trustee and the beneficiary of the trust while you’re alive.
- A qualified personal residence trust may allow you to remove a residence from your estate.
- A generation-skipping trust may be used to leave money in advance to grandchildren without giving them immediate access to it.
- A special needs trust may be used to finance long-term needs for a dependent who is unable to fully manage his or her own affairs.
You can learn more about wills and trusts by viewing this “Estate Planning” webinar.