If estate planning was a building, the last will and testament would be the foundation of the building. It expresses wishes for how assets will be distributed among heirs, names a person to be executor of the estate and often expresses wishes to the family. However, as explained in a recent article from msn, “The Savings Game: The basics of estate planning,” a will on its own is not enough to be an entire estate plan.

If you don’t have a will, the laws of your state will determine how assets are distributed upon your death. State laws are usually based on kinship, so if you don’t want estranged relatives receiving your estate, you’ll want to have a will. If you don’t have a will, legally termed “dying intestate,” the court will name a person in charge of administering your estate. There’s no obligation for this person to be a family member, so a complete stranger may be put in charge of your wealth.

Probate is a court process whereby your will is reviewed and its validity determined. If your will is prepared without the help of an estate planning attorney, it’s possible it will be deemed invalid, and your estate will be intestate. Probate can be time-consuming and expensive. An estate planning attorney will review your estate and determine which assets might be taken from the estate to go directly to theirs.

A living trust, also known as a revocable trust, protects assets while you are living. A trust includes a trustee, usually the person creating the trust, and a second trustee, the successor. In case of incapacity, the successor trustee will be able to use funds in the trusts to pay bills if that is the intention of the trust. In addition, trusts are not part of your probate estate, so they do not become part of the public record upon your death. Once a will is filed in the courthouse, it can be read by anyone who wants to see it—including estranged family members, thieves and creditors.

Estate plans include a Power of Attorney. A Power of Attorney is a legal document giving another person the ability to perform financial and legal tasks on your behalf. The POA can be custom-tailored to your needs. For instance, you may want someone to be able to pay bills but not make gifts on your behalf. Without a POA, interested parties must petition the court for an order declaring your incapacity, obtaining a guardianship, or, depending upon your state, a conservatorship. Not only is this expensive but there is the risk that the court could assign someone you or your family doesn’t want to have this important role.

Your estate plan also addresses healthcare decisions. An advanced medical directive (AMD) is a POA document allowing someone to make health decisions on your behalf when you are incapacitated. You’ll want to have a HIPAA Authorization form created, so physicians and other health care providers will be able to include named family members in decision-making. Your estate planning attorney will discuss the types of healthcare documents you need.

If you don’t have a comprehensive estate plan in place, you risk having court-appointed strangers making decisions on your behalf if you are incapacitated and people you don’t know in charge of your entire estate after you have passed. Having an estate plan will give you and your loved ones peace of mind, knowing the right decisions can be made, by the right people.

Reference: msn (Dec. 5, 2024) “The Savings Game: The basics of estate planning”