Estate planning is of course not a one-size-fits-all exercise. Passing along assets and establishing guidelines for health care decisions is highly individualized work. Though there are common patterns that occur as people face these decisions, there is no ready-made template for making them.
That is why it makes sense to begin with asking the most basic questions about what your goals are. After all, it is only upon clarifying those goals that appropriate decisions can be made about legal forms.
In this two-part post, we will briefly restate some of the basic aspects of estate planning and highlight one area in particular that is can be overlooked or taken for granted: the role of life insurance.
No matter what types of assets someone has to pass on, it makes sense to have a health care proxy in place. Without such a duly executed document, ambiguity can arise as to who has authority to make decisions about medical treatment in the event of incapacity.
It is also utterly basic to have a health care directive in place. Often called living wills, these directives enable someone to establish guidance about medical care they receive or do not receive, particularly concerning end-of-life issues.
In short, the creation of a health care directive and the appointment of a health care proxy are standard elements of an estate plan, regardless of the amount of assets someone has.
Regarding the transmission of assets, however, strategies can diverge greatly. Again, the forms chosen depend on your goals. For example, if tax avoidance is a key goal, there are various types of trusts that can be useful for estate tax planning purposes.
But trusts are hardly the only element to consider in developing an effective estate plan. In part two of this post, we will discuss the role of life insurance in an overall strategy for passing along assets.
Source: Forbes, “What Is Estate Planning?” Russ Alan Prince, Nov. 4, 2013