The Importance of an Estate Plan
Just like a retirement plan, an estate plan is a very important tool for a person or family. While a retirement plan organizes income and asset growth during one’s lifetime, an estate plan provides instructions for medical needs and asset transition when one has become incapacitated or has passed on to glory.
An estate plan clarifies your financial and medical wishes, and grants the authority to an agent to make decisions to carry out these wishes if you are unable to do so. A well-designed plan should help reduce the administrative burden related to the transfer of assets to your heirs, minimize the government’s involvement, and may even help reduce taxes. Even more importantly, it can protect the people you love the most from some of the stress and animosity that can rise amongst family members when there is not a plan in place.
To see how the Provision team describes this topic, watch the video here.
Understanding Estate Documents
Your estate documents should clearly communicate your financial and medical wishes and grant someone authority to assist with each area. This is usually done with at least four documents. It is good to note that the documents are named differently from state to state.
See the matrix below.
Wills and Trusts
Wills and trusts communicate a person’s financial wishes.
Advanced Directives
Advance Healthcare Directives communicate a person’s medical wishes.
Durable Power of Attorney
Financial authority is given with a durable financial power of attorney.
Medical Power of Attorney
Medical authority is given with a medical power of attorney.