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What exactly is an estate plan?

On Behalf of | Mar 7, 2024 | Estate Planning

You may have heard that it is important for adults to create an estate plan and to keep it updated. This is certainly true. But, it’s tough to make that goal a reality if the idea of estate planning is a murky one. By better understanding what an estate plan is, you can hopefully be inspired to seek assistance to effectively draft one of your own. 

At its most basic, an estate plan outlines how an individual’s wishes should be honored and how their assets and responsibilities should be managed and distributed in the event of their incapacitation or death. 

What elements are typically included in an estate plan?

When it is constructed in a fairly comprehensive way, an estate plan encompasses a range of documents and strategies designed to safeguard an individual’s financial well-being and to better ensure that their wishes are honored. 

The core components of an estate plan typically include a will, which specifies how assets should be distributed and names an executor to manage the estate. However, a more comprehensive estate plan goes further, addressing situations that a will alone cannot. For example, trusts can manage assets before or after death, offer tax benefits and allow for more nuanced control over when and how assets are distributed. 

A durable power of attorney allows an estate plan creator to appoint someone to manage their financial affairs if one becomes incapacitated. Similarly, a healthcare proxy or medical power of attorney designates someone to make medical decisions on one’s behalf under the same kinds of circumstances.

Beyond these foundational elements, an estate plan can also address the management of digital assets, guardianship arrangements for dependents and instructions for the continuation or dissolution of a business. 

Now that you know what an estate plan is, it’s time to get drafting. Keep in mind that you can seek legal guidance at any time if you need assistance or have questions about how to better ensure that your plan is enforceable and effective.