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Senior Resources » Estate Planning

Estate Planning

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Estate planning is the process of designating how your assets should be transferred to your beneficiaries in the event of your death or incapacitation. Think of it as preparing a care package for your loved ones. It’s your chance to ensure the wealth and assets you’ve worked so hard for throughout your life will go directly to the people you care about most when you’re no longer here or unable to manage them yourself.

Just imagine, your lifetime of work—the home where countless memories were made, the savings account that grew little by little every month, even your favorite antique brooch—all safely passed on to your children, grandchildren, or other beneficiaries you choose. That’s what estate planning is all about.

But let’s be honest, the process of creating an estate plan can be complex and sometimes confusing. Here’s everything you need to know!

What are the Parts of an Estate Plan?

Estate Planning written on a small easel next to a houseplant

Will

A will, also known as a “last will and testament,” is a legally binding document that outlines how you want your assets distributed after your death. It serves as a guide for your loved ones and the courts to ensure your final wishes are fulfilled. Without a will, you die “intestate,” which means the state law will determine how your assets are distributed—a process that may not align with your wishes. Here’s what typically goes into a will:

  • Distribution of Assets – This includes everything you own—real estate properties, cars, personal possessions, savings accounts, and investments. You can specify who should receive these assets and in what proportion.
  • Appointment of Executor – The executor is responsible for managing your estate once you’re gone. This involves handling paperwork, paying off any debts or taxes, and distributing assets to beneficiaries as per your instructions in the will.
  • Naming Guardians – If you have minor children, your will should specify who you want to care for them should you pass away before they reach adulthood.

Read More About Creating a Will for Your Estate Plan

Trust

A trust is a fiduciary relationship where you give a third party, the trustee, the authority to hold and manage your assets on behalf of the trust’s beneficiaries. Trusts are versatile and can be used in many ways. They can reduce estate taxes or help you control your finances, for example. There are several types of trusts you can include in your estate plan:

  • Living Trust – A living trust is a type of trust that can continue to operate after you pass away. This means that it will continue to manage assets that have been transferred into it by the owner and will provide instructions for how those assets should be managed after his or her passing. With a living trust, the grantor (the person creating the trust) is able to manage and use the assets during their lifetime while ensuring that their assets will be distributed according to their wishes after they pass away.
  • Revocable Trust – This trust is designed to be changed or revoked by the person who created it at any time. It’s usually created by a parent who wants to ensure that a child will receive money from an inheritance but doesn’t want that child to have access to all of it until they reach a certain age.
  • Irrevocable Trust – An irrevocable trust is intended to be permanent, meaning that once money has been deposited, it cannot be removed without going through court proceedings. An irrevocable trust is typically used when someone wants to keep their assets separate from the beneficiaries who will receive them in order to avoid probate fees and taxes on those assets.
  • Testamentary Trust – A testamentary trust is established at death, through a will or other estate planning documents. The beneficiary receives income from the trust, which is managed by a trustee appointed by the deceased person’s will or by law. If there is no beneficiary listed on the document, then the estate will go directly to the heirs.

Read More About Creating a Trust for Your Estate Plan

Power of Attorney

A Power of Attorney (POA) is a potent legal document that allows one person, known as the “principal,” to grant another person or organization, referred to as the “agent” or “attorney-in-fact,” the authority to act on their behalf in various matters. This could be due to the principal’s absence, incapacity, or simply a desire for assistance. There are several types of power of attorney, each serving different purposes and offering varying levels of power to the agent. The most common you’ll usually hear about are:

  • General Power of Attorney – This is the most comprehensive type of POA. It gives broad powers to the attorney-in-fact to act in financial and business matters, such as managing bank accounts, signing contracts, or making investment decisions.
  • Durable Power of Attorney – This remains effective even if the principal becomes incapacitated. It’s often used in planning for future incapacity, ensuring someone can manage the principal’s affairs if they can’t do it themselves.
  • Medical Power of Attorney: This grants the agent the authority to make healthcare decisions on behalf of the principal if they become unable to do so.

Read More About How to Use a Power of Attorney as Part of Your Estate Plan

Medical Directive

A medical directive, or advance directive, is a legal document that outlines a person’s decisions about their medical care if they become unable to make these decisions themselves. This could occur if the person becomes seriously ill or incapacitated due to an accident or illness. The purpose of having an advance directive as part of your estate plan is to ensure that healthcare professionals follow the patient’s own values and choices at a time when they cannot express their wishes. It provides clear communication to both medical staff and family members about what medical treatment the person does or does not want.

Beneficiary Designations

A beneficiary is any person or organization that receives money or benefits from a benefactor. In estate planning, it’s commonly used to refer to a person who will receive assets, property, or other benefits in the event of the benefactor’s death.

Who Can Help With Estate Planning?

elder law attorney sitting at table talking with a senior couple about estate planning

Elder law attorneys are lawyers who specialize in issues that affect seniors. Such a professional can help you with anything from retirement planning to long-term care prep and placement. An elder law attorney can even assist with the navigation of Medicare and Medicaid coverage. And – yes! – they do estate planning too!

Find an elder law attorney near me.

Free Ultimate Estate Planning Checklist and Guide

ultimate estate planning checklist and guide

Planning for the future is important at any age. But, for seniors, retirees, and family caregivers, a well-thought estate plan is essential. Why? An estate plan ensures your wishes are carried out after you pass away. Without one, your assets may not go to the people or causes you want them to. If you’ve been putting it off, now is the perfect time to get familiar with estate planning basics! Download the FREE e-book to learn about all the key parts of an estate plan, where to find more help, and a checklist to help you get better prepared for the process. Download your free e-book here.


Read More About Estate Planning

Watch Videos on Estate Planning

Listen to Podcasts About Estate Planning

Additional Resources

Bob Carlson’s Retirement Watch – Estate Planning

Sensible Portfolios

Taatjes Financial Group

Generational Wealth

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