A lot of people think having an estate plan just means signing a Will. But there is much more to an estate plan to make sure everything goes seamlessly upon your death or incapacity.

A lot of people think having an estate plan simply means signing a Will or a Trust. However, there is much more to include in your estate plan to make certain all of your assets are transferred seamlessly to your heirs upon your death. A successful estate plan also includes provisions allowing your family to access or control your assets should you become unable to do so yourself.

Every estate plan should include:

* Will/Trust

* Durable power of attorney

* Beneficiary designations

* Health care power of attorney

* Guardianship designations

In addition to these documents and designations, a well-laid estate plan also should consider the purchase of insurance products such as long-term care insurance to cover old age, a lifetime annuity to generate some level of income until death, and life insurance to pass money to beneficiaries without the need for probate.

WILLS AND TRUSTS. A Will or a Trust may sound complicated or expensive—something only rich people have. That is an incorrect assumption. A Will or Trust should be one of the main components of every estate plan, even if you don't have substantial assets. Wills ensure property is distributed according to an individual's wishes (if drafted according to state laws). Some Trusts help limit estate taxes or legal challenges. However, simply having a Will or Trust isn't enough. The wording of the document is critically important.

A Will or Trust should be written in a manner that is consistent with the way you've given the assets that pass outside of the Will. For example, if you've already named your sister as a beneficiary on a retirement account or insurance policy (assets that typically pass outside of a Will to a named beneficiary), you don't want to give the same asset to a cousin in the Will because it could lead to a Will contest. Not to mention that both individuals could become bitter toward each other (and you) during a legal battle.

DURABLE POWER OF ATTORNEY. It's important to draft a DPOA, so an agent or a person you assign will act on your behalf when you are unable to do so yourself. Absent a power of attorney, a court may be left to decide what happens to your assets if you are found to be mentally incompetent, and the court's decision may not be what you wanted.

This document can give your agent the power to deal with real estate, enter into financial transactions, and make other legal decisions as if they were you. This type of DPOA is revocable at a time of your choosing, typically a time when you are deemed to be physically able, or mentally competent, or upon death.

In many families, it makes sense for spouses to set up reciprocal DPOAs. However, in some cases, it might make more sense to have another family member, friend, or a trusted advisor who is more financially savvy act as the agent.

BENEFICIARY DESIGNATIONS. As noted earlier, a number of your possessions can pass to your heirs without being dictated in the Will (e.g., 401(k) plan assets). This is why it is important to maintain a beneficiary—and a contingent beneficiary—on such an account. Insurance plans should contain a beneficiary and a contingent beneficiary as well because they also pass outside of a Will.

If you don't name a beneficiary, or if the beneficiary is deceased, your probate estate becomes the beneficiary, thereby making the asset subject to taxes and creditors' claims.

Note: Named beneficiaries should be over the age of 21 and mentally competent. If they aren't, a court may end up getting involved in the matter.

HEALTH CARE POWER OF ATTORNEY. A health care power of attorney designates another individual (typically a spouse or family member) to make important health care decisions on your behalf in the event of incapacity.

If you are considering executing such a document, you should pick someone you trust, who shares your views, and who would likely recommend a course of action you would agree with. After all, this person could literally have your life in their hands.

Finally, a backup agent should also be identified, in case your initial pick is unavailable or unable to act at the time needed.

GUARDIANSHIP DESIGNATIONS. While many Wills or Trusts incorporate this clause, some don't. If you have minor children or are considering having kids, picking a guardian is incredibly important and sometimes overlooked. Make sure the individual or couple you choose shares your views, is financially sound, and is genuinely willing to raise children. As with all designations, a backup or contingent guardian should be named as well.

Absent these designations; a court could rule that your children live with a family member you wouldn't have selected.

THE BOTTOM LINE. There is more to estate planning than deciding how to divvy up your assets when you die. It's also about making certain your family members and other beneficiaries are provided for and have access to your assets upon your temporary or permanent incapacity.

A Will is a great place to start, but it's only the beginning. If you have estate planning questions, give us a call at 253.858.5434 to set up an appointment today. We represent clients throughout Washington and Idaho and are available to meet in person (with appropriate social distancing protocols in place), by phone, or via video conference.