Many people with common estates believe that a coherent estate plan consists of just a will. This perception about estate planning emanates from the idea that estate planning is only about transferring property after death. Unfortunately, if you believe in this misguided perception about estate planning, you will never complete a coherent estate plan.

Before planning your estate, you must understand that estate planning involves taking care of yourself first, then your property. Sadly, at some point in your life, you may become too ill to handle your own affairs. Therefore, you must provide instructions to manage this possibility in your estate plan; otherwise, the state court will intervene. So, to avoid state court interference, a coherent estate plan must consist of more than just a will.

What Makes a Coherent Estate Plan?

According to Plan Your Estate by Nolo, there are four essential documents needed to build a coherent estate plan. The four documents are as follows:  

• Will or Living Trust – A will is fine for common estates. However, a living trust is better if you need to plan for out-of-state real estate or a continuing business. Also, a living trust will need a backup will. The will handles some property better than a living trust such as a car.

• Living Will – A living will allows you to state your wishes about life support and other medical treatments. This takes effect if you can’t communicate your own health care wishes.

• Health Care Proxy –  A legal document that allows you to name a person to make medical decisions for you while you are incapable to do so.  

• Durable Power of Attorney for Finances – A legal document that allows you to name a person to handle your financial affairs while incapacitated.

Additionally, to make these documents valid, the requirements for each document are similar to the requirements for a will as described in the article What Makes a Will Valid?. Once the documents become valid, your coherent estate plan is complete. 

Additional Considerations for Your Estate Plan

In addition to the four documents, you may consider adding the following information to your estate plan:

1. List passwords for on-line accounts and social media sites.
2. Keep tax returns for at least 3 years in case of an audit.
3. Provide a medical history.
4. Provide military discharge papers, if any.
5. Supply details of funeral and burial arrangements.
6. Furnish the location of important objects such as the key to a safe deposit box.
7. A list of companies authorized to deduct payments from a bank account.

Although there is no requirement for this information, volunteering the information makes handling your affairs much easier.

Was this article helpful? Do you understand why a coherent estate plan involves more than just a will? Share your comments and questions in the comment area below.

Recommendations

Plan Your Estate– Plan Your Estate by Nolo explains estate planning documents in much more detail. Additionally, the book gives estate plan samples for nearly all situations.