Estate Planning Basics

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“Most people believe that estate planning involves drafting a will or trust. The estate planning process involves more than drafting an estate plan or trust. It is also necessary to ensure that your assets are handed over effortlessly to your heirs at the time of death. Specific estate planning documents include healthcare powers of attorney, wills, and trusts.”

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Estate Planning Basics

When you cannot manage your assets, a successful estate plan allows your family members to access your help. We should consider estate planning basics, even if it seems exclusive to the super-rich with huge beach houses and billions in the bank.

Whatever your net worth, estate planning ensures your assets are handled properly after you die.


Estate Planning – What Is It?

What are the basics of estate planning? Everyone has an estate—it’s just the total of their assets, such as their car, home, investments, financial accounts, and other possessions of value. Estate planning determines who will inherit your possessions upon your death and will oversee your care if you become incapacitated and unable to make decisions about your finances or healthcare.

The goal of estate plans is to be a board-certified estate planning and probate lawyer with Knighton & Stone, Spring, Texas. Because the word ‘estate’ makes people uncomfortable, I focus on the word plan. Therefore, the process is about more than just the commas and zeros; it is about making a plan.

The basic principles of estate planning overview/estate planning basics are as follows:

  • If you become incapacitated, your estate plan lets you know who will inherit your assets and make critical healthcare and financial decisions for you. In your estate plan, you can appoint legal guardians for your minor children should you die before they are 18, as well as adults who will safeguard their financial interests if you have little children.
  • Using an estate plan, you can legally leave assets to specific people or entities, such as giving your antique desk to your daughter or donating $500 to your favorite animal rescue organization.
  • Essentially, the plan is the mechanism for getting the “what” to the “whom.” You can, for example, create a trust if a child lives with you until they are an adult or keep assets out of probate so beneficiaries can access them easily.


Essential Estate Planning: What Does It Include?

How estate planning works? Comprehensive estate planning information must include documents that address asset transfer, medical needs, and financial decisions.


Documents related to asset transfers

Wills and trusts are the most common asset transfer documents. These documents detail your wishes for:

  • Beneficiaries’ distribution of your assets
  • Custody and guardianship of minors
  • Children and adults with special needs receive care.
  • Gifts for charitable purposes


The Will

If you have a will, specify how your assets will pass when you pass away. You choose an executor to be in charge of administering your assets after death.

If your will specifies a beneficiary for your engagement ring, your sister will inherit it, but if your will doesn’t define an heir, your brother and sister should share every asset in your estate.

During probate, your executor has the right to begin distributing your assets according to the terms of your will by the court.


The trusts

Trusts hold assets on behalf of beneficiaries, reducing probate hassle in some states. The most common types of living trusts used in estate planning are revocable and irrevocable. You name a trustee in your confidence to administer your assets according to its provisions.


Revocable living trust.

A trust allows your assets to pass outside of probate, so you control them while alive. It is possible to serve as a trustee, add support to the trust, or name beneficiaries as you see fit. When you die, your assets will pass by a trustee you choose.


Irrevocable living trust.

Consider an irrevocable living trust when you want to avoid estate taxes. These trusts remove assets from your control and transfer them to a trustee even while you are still alive. As assets are removed from your estate and placed into the trust, they contribute to reducing estate taxes since they no longer belong to your estate.


Medical Needs

An estate plan isn’t just something that kicks in after your death. It has much more to do with your financial future and legal responsibilities. Estate planning goes beyond the simple transfer of assets.

Clients should include advanced healthcare directives in their estate planning to cover all their medical bases. An accident or memory loss disorder may prevent you from making healthcare decisions for yourself. In that case, you can designate an individual to care for you on your behalf with a medical power of attorney (POA). Medical POAs cover all aspects of healthcare, including end-of-life care.


Living Will

In estate planning basics, living wills are your proxy when you cannot express your wishes to your family or health care providers. A living will only apply to end-of-life matters and specify your wishes for life support measures and resuscitation.

Advance healthcare directives can be used as medical powers of attorney and living wills in some states. So be sure to learn about your state’s specifics. Your medical estate planning forms should also include a HIPAA authorization form, which specifies who has access to and can discuss your medical records with you.


Financial Decisions

In your estate planning basics, at least one document should include that protects you during your lifetime: an irrevocable, durable power of attorney.

If you cannot make legal or financial decisions alone, you can name a trusted individual to make those decisions on your behalf. The “durable” part of the name means it’s still in effect even if you are physically or mentally incapacitated.


The Most Commonly Used Estate Planning Documents

Your estate plan basics comprise several documents, all of which are important. Combined, they represent your final wishes powerfully.


The Most Commonly Used Estate Planning Documents



You must state what you want to happen after you die and who you will choose to care for your children or any other dependents if you can no longer do so. It is common for your will to contain instructions regarding guardianship.



It describes how you wish to distribute your assets or property in the event of your death.



It is a legal three-party fiduciary agreement where the first party, known as the Settlor, gives the second party, known as the Trustee, the right to hold assets and properties for the third party, known as the Beneficiary.


A Power of Attorney for Financial Matters (POA)

A legal document granting someone control over your finances.


POAs (Powers of Attorney)

“Durable” means that it has an effect despite your incapacity. This variation of a Financial Power of Attorney gives someone legal rights over their non-health or non-medical affairs.


A Health Care Advance Directive (AHCD)

An Advance Healthcare Directive is an advance directive that specifies what will be done for you if you become incapacitated and unable to make decisions for yourself.

Medical Powers of Attorney, Living Wills, and Advance Health Care Directives often appear interchangeably but have legal differences. Living will specify your medical preferences (typically regarding end-of-life support).

You may designate someone else if you cannot make healthcare decisions yourself. A Living Will and a Medical Power of Attorney are combined in an AHCD, allowing you to give instructions while appointing someone else to decide on your behalf.


Authorization under HIPAA

You consent to third parties sharing your medical records or information.


Estate Planning: Who Needs It?

An estate planning basics idea is good for everyone. It’s easy to convince yourself that you don’t need one, but the reality is that we are all better off if we plan for our future. If you are over 18, you should start thinking about creating an estate plan even if you are not wealthy, elderly, or even have a certain amount in your bank account.

A well-written Estate Plan guarantees everyone knows your wishes, even if you have limited assets. If you become incapacitated or cannot express your desires, your Estate Plan will speak for you, so your loved ones will not have to make unthinkable decisions or wonder what you would like. This is evident in health directives and long-term healthcare wishes.

The cost of adequately preparing the documents needed for an Estate Plan was thousands. But now you have options. Create an Estate Plan that is affordable, legal, effective, and valid, ensuring clarity in case the time comes when it’s necessary. An Estate Plan is still a good idea, even with limited assets.


The Steps to Creating an Estate Plan

Creating an estate plan involves many steps, but we have listed them all to make it as easy for you as possible.


Gather your assets.

From cars to collectibles, inventory everything you own.


Protect your family.

Take a moment to consider whether you have enough life insurance to maintain your family’s lifestyle after you die. Determine the plan that’s best for you. Choose an Estate Plan that is right for you.

Choose who you would like to be the guardian of your children/pets/self. Choosing a guardian if you have children, pets, or someone you care for who cannot care for themselves is essential. Should you ever become incapable of making medical and financial decisions, you can also name the person you would like to make those decisions on your behalf.


Determine and establish the necessary directives.

Here are some commands you should include in your Estate Plan:

  • Creating a durable power of attorney
  • Directives for medical care
  • Limited Power of Attorney – LPOAs rarely exist (instead, durable POAs are more common), but they may sometimes be appropriate.


Name your Beneficiaries.

Beneficiaries may already exist for specific documents or accounts, including retirement and life insurance plans. You should also include contingent beneficiaries in your Will or Trust. You should name contingent beneficiaries if there is an opportunity. Beneficiary designations go into effect only after you pass away, so if your health deteriorates and you cannot make decisions for yourself, you will have to prepare for more than just naming beneficiaries.


Find a trusted partner.

Create your Estate Plan face-to-face with an attorney or another service provider. There are several ways to do this, but some will cost more. Working with Trust & Will might be the perfect way to begin the process of Estate Planning if you don’t have an overly-complexed estate.

Create your plan. Remember to finalize everything if you create your Estate Plan with an online program.


Sign and notarize your Estate Plan.

Check with your state to see how many witnesses you need.


Notify your Executor.

Telling your executor about your intentions is a good idea.


Store your Estate Planning documents.

Keep your Estate Plan in a fireproof safe that your family can easily access.


Update as needed over time.

When updating your Estate Plan, there isn’t a hard rule, but a good one is to update it whenever a life event occurs. If you have yet to experience any life events in the past few years, consider reviewing and updating as needed every 3 to 5 years.


Mistakes to Avoid When Real Estate Planning

It would help if you took care when creating your Estate Plan to avoid delays, mistakes, or misunderstandings. Here are a few of the most common errors people make:

  • A lack of an official plan
  • A project does not receive updates over time when major life events occur.
  • Failure to make arrangements for long-term care or disability if they become incapacitated
  • Incorrect ownership of assets (the ease with which a transfer of investments is possible)
  • Excluding charitable contributions
  • Not appointing a guardian for a child or another who needs their assistance.
  • Underestimating the tax implications
  • Liquidity issues
  • Giving no gifts during their lifetime to reduce their estate’s value after death (tax advantages)
  • Deeding property in the name of their child (possible tax consequences)


What Is The Process Of Creating An Estate Plan? Do We Need An Attorney?

Creating an Estate Plan does not always require an attorney. A traditional face-to-face approach may be best for those with complex estates. However, many people have simple, straightforward requirements. Attorney Real Estate Group may best serve their Estate Planning needs.

This service can save you time and money while still delivering a high-quality product that covers all the essential things you want to take care of. Creating an estate plan is complicated, but tackling each part one at a time is the most efficient way to protect everybody in your life.


Bottom Line

Making your estate plans will benefit you in numerous ways. It first gives you peace of assurance. If you have kids, such a will permits you to designate a guardian who will care for them in case you pass away.

Planning for your estate can help make the challenging process of managing your finances following the passing of those you love in a time of emotional turmoil. Estate planning documents give you a blueprint of what needs to be done with the assets to ensure that your heirs don’t have to guess your intentions. An estate plan that is laid out can help minimize disputes or disagreements concerning your property or assets.

Hedy Ghavidel

HEDY GHAVIDEL Managing Attorney  Roseville Office  1-866-471-6981  Bio...

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