Think of an estate plan as an ongoing project that changes as your life changes. It’s never the wrong time to strategize for the management and transfer of your estate after your death, but certain major life events — like marriage, the birth of a child, or a death in the family — can move it to the top of the to-do list.
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A well-thought-out estate plan determines who will eventually receive your assets. It identifies the legal instruments that you will use to accomplish this, like a will and/or trusts.
Although it is stressful to consider these matters, finalizing an estate plan can bring a sense of security for both you and your family.
Essential Parts of an Estate Plan
Since every person’s life is different, every estate plan is different as well. Your estate plan will depend on the assets you own, the persons you wish to benefit, the laws of the state in which you live, and your objectives.
Most estate plans include one or more of these documents:
- Will: A document that sets out who you wish to receive your assets when you die and can name a guardian for minor children and an executor to manage the probate process.
- Trust: A written agreement in which you, the grantor, gives a second person, the trustee, the authority to hold certain assets on behalf of a third person or group of people, called the beneficiaries.
- Power of attorney: A document giving a trusted individual the right to act in your place in financial or legal affairs. This is often called a POA.
- Medical power of attorney: A document giving a trusted individual the right to make healthcare decisions for you if you are not able to do it yourself.
- Living will: A document in which you set out your medical preferences, like end-of-life decisions, which the medical POA must follow. When you address the medical power of attorney and the living will in one document, it is sometimes called an advance health care directive.
Finalizing an Estate Plan
States establish rules for preparing and finalizing estate planning documents. Failure to follow these rules can invalidate these documents.
That means that Florida’s rules for how to finalize an estate planning document won’t necessarily be the same as the rules in California. And requirements for executing one document (e.g. requiring a notary for a will) may not apply to other estate planning documents.
Executing Estate Documents
“Executing” an estate planning document simply means signing it in the manner required by law. State laws often require some security steps to make sure there is no mistake or fraud involved, and that the person signing is not an imposter.
These laws on execution of estate planning documents vary from state to state and document to document.
- You must sign estate planning documents in front of a notary in some states. For example, some states require this for a will, trust, and/or POA.
- You must sign some estate documents in front of two adult witnesses in other states. These witnesses also sign the document. Some states require two witnesses, and some only require one.
- In some states, those who will receive property or assets under a will cannot be witnesses for that will.
Always check to see what your state requires for a document before executing it. If you are using a statutory form provided by the state or a Bar Association, it will probably provide instructions on execution. If you are in doubt, consult an attorney.
Who To Notify About the Estate Plan
The great thing about estate plan documents like wills and trusts is that you can keep them private during your lifetime if you like. But this isn’t necessarily a good idea. If you feel that family members may object to the terms of the document and pressure you to change your decisions, you can keep the details quiet.
However, it is important to notify those who will playing key roles in administering the plan after you are gone. For example, if your will names a guardian for your minor children or an executor, ask these people to agree to serve in these roles before executing the documents. Likewise, anyone named as an attorney in fact in a POA or medical power of attorney should also be consulted early.
You may also wish to provide them with copies of the relevant documents. Many people give a copy to their attorney and to their spouse or closest family member. You definitely don’t want these documents getting lost or forgotten before going into effect.
Revisit your estate plan every few years and rewrite the documents as needed to address life changes and new circumstances. Don’t forget to hand out new copies of the old documents to those you have taken into your confidence.
