If you thought that just by having a will drawn up by an elder life estate lawyer satisfied your needs for effective, complete estate planning; think again. The will is certainly necessary to assure that the disposition of your assets are distributed during or after the end of your life according to your wishes, but it is just one of several essential estate planning elements.
You do not have to be wealthy to consider estate planning. Your estate consists of all of your assets, as well as the debts associated with them, if any. For example, if you own a home, but it has an outstanding mortgage at the time of your death, your designated inheritor(s) will have the equity in the home available to them, but the mortgage contract does not expire when your life ends; the inheritor(s) also inherit the outstanding debt.
But that is just one obvious example of adequate estate planning. Let’s review the elements of an effective estate plan:
The will may be the foundational element of an estate plan only in that it may represent the most significant description of your assets and your desires relative to the distribution of those assets. Typical inheritors of an estate are children of a marriage, other family members, good friends, institutions and charities. Your estate will go through probate even with a will, but the process is streamlined when a will is in force. Without a will, probate court must determine an appropriate disposition of your assets.
If a will does not designate inheritance of specific items of value in your estate, such as jewelry, cash, real property, etc, even well-meaning children, family and friends may erroneously conclude your intent.
A trust is much like a will, but it is a legal instrument that can begin to take effect while you are living. You, an institution, a designated agent, or a lawyer, called the trustee, holds title of property for another person or persons, called beneficiaries. One benefit of a trust is that because a beneficiary is designated as having title-in-waiting of property, the estate need not go through probate following your death. Trusts can also have tax advantages for both trustee and beneficiaries.
Living will, power of attorney and medical directive allow you to authorize another trusted person to be an agent acting on your behalf in matters of financial, legal and health issues for which you may become too incapacitated to decide for yourself. These instruments are in force during your life, and, if a durable power of attorney is drawn up, after the end of your life. These become essential instruments with legal force in the event you are completely incapacitated by a sudden incident, such as a heart attack, which would require artificial means to prolong your life. These instruments allow your designated agent to advise against or for these actions depending on your wishes designated in the instrument.
These instruments are essential estate planning tools to assure your estate is distributed to beneficiaries according to your wishes.