Until you sit down to work on your plan most of the components of an estate plan remain a mystery. Not surprisingly, this leads to several questions. What do each of the estate planning tools accomplish? Which tools and strategies should be included in a plan? What are the most common components of an estate plan? The North Andover estate planning attorneys at DeBruyckere Law Offices explain five things that should be in any estate plan.
- Last Will and Testament. You will probably not be surprised to learn that most people use a Last Will and Testament as the foundation of their initial estate plan. Executing a Will ensures that you will not leave behind an intestate estate. Dying intestate means the state decides what happens to your estate assets using the state intestate succession laws. Instead, your Will allows you to make specific and/or general gifts to loved ones. In addition, your Will lets you appoint someone as the Executor of your estate. The Executor is responsible for overseeing the administration of your estate.
- Trust Agreement. Although once used almost exclusively by wealthy families to protect and pass down the family wealth, trusts are now commonly found in the average estate plan. A trust is a relationship where property is held by one party for the benefit of another party. A trust is created by the owner, also called a “Settlor”, “Trustor” or “Grantor” who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. A trust can help achieve a wide variety of estate planning goals and can even serve as the foundation of you estate plan if probate avoidance is desirable.
- Advance Directive. Throughout the course of your lifetime, you will make many decisions regarding your own health care. There may come a time, however, when you cannot make those decisions because of your own incapacity. An advance directive helps you plan for that possibility. Most states recognize at least two types of advance directives. One allows you to name someone to make healthcare decisions for you if you cannot make them while the other allows you to make crucial healthcare decisions yourself now in case you cannot make them at a future point in time.
- Power of Attorney. A power of attorney allows you to appoint someone as your Agent to act on your behalf in legal transactions. There are two types of power of attorney, general and limited. A general power of attorney (POA) gives your Agent almost unfettered authority to act on your behalf, meaning your Agent can engage in financial transactions on your behalf, enter into contracts in your name, and sell your assets. A limited POA, on the other hand, only gives your Agent the specific authority indicated in the POA agreement.
- Letter of Instruction. Think of this as your estate planning “catch all.” As the name implies, a Letter of Instruction lets you leave instructions and provides you with the opportunity to cover anything not covered elsewhere in your plan. Some people use it to explain decisions made in their estate plan while other use it to provide instructions that may be helpful during the probate of the estate. For example, if you did not divide your estate equally amongst your children, you might want to explain why you didn’t in the hope of preventing litigation and hurt feelings. You might also need to tell loved ones where important documents can be located or even something as seemingly mundane as how to winterize a vacation home.
Contact a North Andover Estate Planning Attorney
If you have additional questions or concerns, please contacta North Andover estate planning attorney at DeBruyckere Law Offices by calling our New Hampshire office at (603) 894-4141 or our Massachusetts office (978) 969-0331 to learn more or visit our website at https://dadlawoffices.com .
Your Will offers you the only opportunity you have to officially nominate a Guardian for your minor child should one ever be needed.
Trusts are broadly divided into two categories, testamentary and living trusts. A testamentary trust does not activate until after the death of the Settlor whereas a living trust takes effect as soon as all the trust agreement is in place and the trust is funded. A living trust can be further divided into revocable and irrevocable living trusts.
If you make any POA durable it means that your Agent’s authority will survive your incapacity.