The 3 Key Components of a Good Estate Plan
Estate planning is the process of managing your property while you are living and providing for its distribution after your death. A good estate plan has three key components:
- Last Will and Testament or Living Trust – If you do not specify who receives your property, then the State of Oklahoma decides for you. In some cases, this is an acceptable outcome. More often, however, it leads to undesirable results. The two options for stating your wishes are a Last Will and Testament and Living Trust. The former merely gives the probate court instructions about how to distribute your property. The latter provides you with significant flexibility in controlling the manner of your beneficiaries’ inheritances, and it also maintains the privacy of your estate. The choice between a Last Will and Testament and Living Trust turns on many factors, and it is something you should discuss in detail with your estate planning attorney.
- Durable Power of Attorney – Unfortunately, as we age, accidents and illness occur more frequently. Whether due to stroke, a car wreck or Alzheimer’s disease, incapacity is always a possibility. If you are incapacitated, then you cannot legally make important decisions about your finances, such as withdrawing money from bank accounts, filing tax returns or selling your house. With a Durable Power of Attorney, you appoint someone to execute these tasks for you in the event you are unable to do so.
- Advance Directive for Health Care – Many people remember the case of Terry Schiavo, the young woman at the center of a national controversy over end-of-life medical treatment. Ms. Schiavo suffered a stroke and, as a result, was in a persistent vegetative state that her doctors said was permanent. Ms. Schiavo’s fiance wanted to withdraw life support, while her parents sought to keep her alive. The ensuing legal battle dragged on for years. You can avoid such a tragic situation by utilizing the Advance Directive for Health Care, a legally binding document that tells doctors your wishes concerning life support if you are incapacitated and have a terminal condition, are in a persistent vegetative state or if you have an end-stage condition.
A Last Will and Testament or Living Trust, Durable Power of Attorney and Advance Directive for Health Care form the foundation of a comprehensive estate plan. Additional documents may be necessary, but this is where you should start.