An estate plan is a set of legal documents—each formally signed by you— that expresses what you want to happen to you, your property, and your children (if you have any) during and after your lifetime.
Most people think only of a will, or perhaps a trust, when they think of estate plans—i.e., a device for passing along property after death. But that’s only part of the picture. A complete estate plan covers needs that may arise during your lifetime, too.
What’s that mean? If you become unable to manage your affairs later in life—due to illness, age, accident, anything—your estate plan should tell people three things: how you want to be cared for; how you want your affairs to be handled; and who should be in charge. In this sense, an estate plan is really a contingency plan. It covers both your person (with an advance health care directive/power of attorney) and your property (with a power of attorney for finances and, often, a trust).
So a typical estate plan, covering your lifetime and post-lifetime affairs, includes:
- A trust
– A will
– A power of attorney for finances
– An advance health care directive/power of attorney for health care
– Related documents (such as a certification of trust, general assignment of personal property, and trust transfer deed).
Of course, if you’re relatively young, in good health, and not an underwater deep-sea welder (that is, not in a high-risk occupation), the likelihood of your becoming incapacitated or passing away any time soon is low. But the point isn’t to create an estate plan out of fear of what your future may hold. It’s to prepare thoughtfully for what the future holds, for your sake and for those close to you.