An estate plan is a set of legal documents that say what happens to an individual’s estate after they die. This article provides information on the documents generally included in an estate plan and explains the differences between an estate plan and a will. It also covers who should get an estate plan done and includes tips for having what may be a difficult conversation. Finally, it names the types of professionals who can help put together an estate plan.
What is an estate plan?
An estate plan is a set of legal documents that say what happens to an individual’s estate after they die. A person’s estate is everything that belongs to them, including their home, car, money, pets, and belongings. Many estate plans include more than just a person’s decisions about their belongings and financial assets: they also include legal documents called advance directives. These documents tell doctors and caregivers the person’s preferences about medical treatment in case they can no longer speak or act for themselves.
What does an estate plan contain?
Common documents in an estate plan include:
- A will. This document says how an individual wants their assets distributed after they’ve died.
- A living will. This document is different from a normal will. It says how an individual wants doctors to act in different situations if they are dying, unconscious, or otherwise unable to speak for themselves.
- A power of attorney document. This document says who will have the ability to act on behalf of an individual about legal and financial matters.
- A healthcare power of attorney document. This document says who will have the ability to make medical decisions on behalf of an individual.
Some plans are more extensive than this. For example, a plan may include documents that set up trusts, reduce taxes, or say who gets guardianship of any children
Is an estate plan the same as a will?
No. A will is usually an important part of an estate plan, but it is just one part. An estate plan contains multiple documents that cover multiple topics. Some of these are about what happens after the person dies, but some are also about what happens as they get close to death.
Should only wealthy people do an estate plan?
No. Everybody should do an estate plan. Sometimes people may think that they don’t have an estate, or that it is too small for them to bother doing an estate plan. In reality, any person who has any belongings has an estate. If they want those belongings to be given to the people or organizations that they prefer, they need to say so in a legal document.
In addition, the advance directives in the estate plan are needed for doctors and caregivers to know how to act if the person can no longer speak or think clearly. For example, a Do Not Resuscitate order tells doctors not to try to revive them if they stop breathing or their heart stops beating. In many cases, doctors cannot legally withhold treatment without these legal documents, even if you and other family members tell them it’s what the individual wants.
If the person you are giving care to tells you they don’t have enough money or possessions to bother with estate planning, it can be helpful to remind them that their pets, books, mementos, and photographs are all part of their estate.
What if my loved one doesn’t have an estate plan?
If your loved one hasn’t done any estate planning yet, they are not alone. Although the pandemic made more people aware that they should create an estate plan, 67% of Americans still have not even made a will.
Knowing that the person you are taking care of is in the majority doesn’t make it any less scary or frustrating. When a person has not legally documented their wishes, you are left with many unknowns about their medical care and what happens to their belongings after death.
How can I encourage my loved one to start an estate plan?
It can be tricky talking to a person about estate planning. Many people dislike talking about their money, values, and the idea of dying, even with a family member or close friend. It can be hard for you, too, to think about life after the passing of your parent, spouse, partner, or friend.
Here are some tips for getting the ball rolling.
- Be prepared. Make a list of key questions, and go over them in your mind. This makes it more likely that you will stay calm and constructive instead of being pulled into more emotional territory.
- Be patient. Keep in mind that the person is probably feeling like they’ve lost a lot of control over their life. Ask open-ended questions, try to listen to their answers without judging, and help them feel like they are making their own decisions.
- Put the focus on their wishes. Emphasize that the main goal of an estate plan is to ensure that their desires and preferences are followed. Explain to them that these need to be written down in legal documents, or people may not be legally allowed to carry them out.
- Let them keep their privacy. Tell them that you don’t need to know how they are leaving their money or possessions. They can talk to a lawyer or other estate-planning professional about that. You just want them to start the process.
Remind them that something is better than nothing. If the idea of a full estate plan overwhelms them, suggest that they start with a few key actions, such as making a simple legal will, naming an executor, and filling out a one-page end-of-life form.
Who can help with estate planning?
Estate plans are usually created with help from several kinds of professionals:
- A notary. A notary is a legal professional who can help an individual create a legal will and advance directives such as power of attorney. Notaries are specialists in estate planning.
- A lawyer. A lawyer can do most of the same things as a notary. Unlike a notary, they can also file legal documents in court and argue the case in court if the will is contested. There are many elder law attorneys who specialize in helping seniors create an estate plan.
A financial planner. A financial planner can help an individual increase their financial assets, create trusts for children and other heirs, and set up ways to reduce the tax burden on surviving family members.