5 basic components of an estate plan

by | Sep 15, 2023 | Estate Planning

When it comes to securing your family’s future and ensuring they honor your wishes, having a comprehensive estate plan in California is important.

Although everyone has different circumstances, most estate plans include a few basic ingredients.

1. A well-defined will

A will is the cornerstone of an estate plan, which only 34% of Americans have. It outlines how you want your assets distributed after your passing. Ensure your will clearly identifies your beneficiaries and specifies who should inherit which assets. Without a valid will, California’s intestate succession laws will determine asset distribution, which may not align with your preferences.

2. Durable power of attorney

Designate a trusted individual as your agent with a durable power of attorney. This person will have the legal authority to make financial decisions on your behalf if you become incapacitated. This document ensures someone you trust can manage your finances without the need for court intervention.

3. Advance healthcare directive

An advance healthcare directive, also known as a living will, allows you to specify your medical preferences if you are unable to communicate your wishes. It covers issues like life-sustaining treatments, organ donations, and the appointment of a healthcare agent to make medical decisions on your behalf.

4. Digital asset management

In the increasingly digital world, do not forget to include provisions for your digital assets. Provide instructions on how to access and manage your online accounts, including email, social media, and financial accounts.

5. Letter of Intent

Consider drafting a letter of intent to provide additional guidance for your executor or beneficiaries. This non-binding document can offer valuable insights into your personal preferences, sentimental items, and any specific wishes you may have.

Even after having a plan in place, remember that life changes, which makes it important to update regularly.