What is Essential to Include in an Estate Plan?

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An estate plan is essential to protect your loved ones and their futures.

Estates planning can become quite complex for those with complex assets wealth or family tensions.

Those who require a only a “simple” plan, may be surprised at the number of documents required to meet their needs.

It is safe to say estate planning is essential and has essentials.

According to a recent Kiplinger article titled “The Essentials You Need for an Estate Plan,” it is far better to create a plan in advance than leave you loved ones to suffer the consequences of your failure to plan.

An estate plan is necessary to protect your loved ones.
You likely will not need the same estate plan as your neighbor.

Failing to create a estate plan can lead to a high tax bill, an expensive estate settlement, and long legal proceedings.

What should you include in your estate plan?

A Last Will and Testament.

This is the most well-known aspect of estate planning.

Through this document, you can select how you want your assets to be distributed from your estate.

You can also choose a guardian for your minor children and the executor to settle your estate.

Without a last will in place, you will die intestate.

This means the probate court will apply the laws of your state to determine who rears your children, inherits your assets, and administers your estate.

Beneficiary designations.

Certain assets like qualified retirement accounts, life insurance policies, and annuities do not pass through a last will, unless it is intentionally designated as the beneficiary or there is no beneficiary designated.

When you designate a beneficiary, that person (or charity) inherits the asset directly when you die rather than waiting for it to distributed through probate.

What happens if you do not name a beneficiary?

As I noted above, for wont of a beneficiary the “estate” will inherit the asset.

Once it is part of your estate, then it will be distributed either according to the terms of your last will or by intestate succession if there is no last will.

Often this proves to be quite costly to your estate.

You should review and update your beneficiary designations as part of your estate plan.

The designations supersede the provisions in your last will.

For example, if you remove your ex-spouse from your last will but not your beneficiary designations, then you ex will inherit the asset.

Yikes!

In both Kansas and Missouri, very generous non-probate transfer laws allow nearly every asset to “transfer on death” just like your qualified retirement accounts, life insurance policies, and annuities.

This even applies to real estate.

However, not all state laws provide for transfer on death deeds.

Living Will or Advance Directive.

These documents are important for including incapacity planning into your estate plan.

They allow you to provide instructions on the type of medical treatment you would like to receive (or not receive) and designate an agent to make health care decisions on your behalf.

Without these, your loved ones would need to petition the probate court to make medical decisions.

General Durable Power of Attorney.

With a this document you can legally appoint a trusted individual to manage your finances if you are unable to do so yourself.

This can include overseeing your investments, paying your bills, and maintaining your home.

Trust.

Although a trust is not necessary for an estate plan to be effective, it can be very useful for leaving money to financially irresponsible heirs or minor children.

The trust can hold title to your assets and you can appoint a trustee to manage what is held in the trust according to the terms of the trust.

Digital Assets.

Your estate plan should include your digital assets.

Social media accounts, emails, websites, and other digital property (think family photos) will need to be inventoried and organized.

Although you should not put usernames and passswords in a public document like a last will, you should keep these secure and updated for your executor to access.

An estate plan is essential to protecting everyone you love and everything you have.

Work with an experienced estate planning attorney to utilize the necessary legal tools to meet your goals.

Reference: Kiplinger (April 21, 2021) “The Essentials You Need for an Estate Plan”

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