6 Estate Planning Must-Haves

By GLENN CURTIS   Updated February 27, 2022

Reviewed By Khadija Khartit  Fact Checked By Pete Rathburn

Many people believe that having an estate plan simply means drafting a will or a trust. However, there is much more to include in your estate planning to make certain all of your assets are transferred seamlessly to your heirs upon your death. There are specific estate planning documents, like healthcare power of attorney and will or trust.

A successful estate plan also includes provisions allowing your family members to access or control your assets, should you become unable to do so yourself.

KEY TAKEAWAYS

Estate planning is not only for the wealthy—everybody can benefit from ensuring their assets and finances are properly taken care of after their death.

Without a will, a probate court could lead to an unintended distribution of assets.

Estate planning is also useful if you become incapacitated.

A will is part of an estate plan.

If you have underage children, an estate plan is extremely important, as it will list their guardians, in the event your spouse cannot care for them after your death.

Estate Planning Basics

The Estate Planning Must-Haves

Here is an estate planning checklist of items every estate plan should include:

Will/Trust

Durable Power Of Attorney

Beneficiary Designations

Letter Of Intent

Healthcare Power Of Attorney

Guardianship Designations

In addition to these six documents and designations, a well-laid estate plan also should consider the purchase of insurance products such as long-term care insurance to cover old age, a lifetime annuity to generate some level of income until death, and life insurance to pass money to beneficiaries without the need for probate.

Does your estate plan measure up? Let's examine each item on this checklist to make sure you haven't left any decisions to chance.

1. Wills and Trusts

A will or a trust may sound complicated or expensive—something only rich people have. That is an incorrect assessment. A will or trust should be one of the main components of every estate plan, even if you don't have substantial assets. Wills ensure property is distributed according to an individual's wishes (if drafted according to state laws). Some trusts help limit estate taxes or legal challenges. However, simply having a will or trust isn't enough. The wording of the document is critically important.

A will or trust should be written in a manner consistent with how you've bequeathed the assets that pass outside of the will. For example, suppose you've already named your sister as a beneficiary on a retirement account or insurance policy (assets that typically pass outside of a will to a named beneficiary). In that case, you don't want to bequeath the same asset to a second cousin in the will because it could lead to a will contest. Not to mention that both individuals could become bitter toward each other (and you) during a legal battle.

Always name a guardian and a backup guardian for your underage children in your will. If you do not name a guardian, the courts may decide to place your young children with a family member (not of your choice) or even put them in the state's custody.

2. Durable Power of Attorney

https://www.investopedia.com/articles/pf/07/estate_plan_checklist.asp