There is more to include in your estate plan than just a Will or Trust Agreement to make sure your assets are transferred seamlessly to your heirs upon your death.

Many people believe that having an estate plan simply means drafting a Will or a Trust Agreement. 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 members to access or control your assets, should you become unable to do so yourself.

Most estate plans should include:

* A Will (including guardianship nominations for minor children) and/or Revocable Living Trust

* A Durable Power of Attorney

* Beneficiary designations on nonprobate assets

* A Healthcare Power of Attorney

* A Directive to Physicians (also called a "Living Will")

In addition to these items, a well-thought out 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 assessment. 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. 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 consistent with how you've given the nonprobate assets that pass outside of the Will. For example, suppose 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). In that case, you don't want to give the same asset to a second 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.

Always name a guardian and a backup guardian for your minor children in your Will. If you do not name a guardian, the court may decide to place your young children with a family member (not of your choice) or even put them in the state's custody.

DURABLE POWERS OF ATTORNEY. It's essential to draft a Durable Power of Attorney (DPOA), so an agent or a person you assign will act on your behalf when you cannot do so yourself. Absent a DPOA, 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 buy and sell real estate, enter into financial transactions, and make other legal decisions as if they were you. This type of DPOA is revocable by the principal at a time of their choosing, typically when the principal is deemed to be physically able, mentally competent, or upon death.

In many families, it makes sense for spouses to set up reciprocal DPOAs. However, it might make more sense in some cases 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 assets 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 might also pass outside of a Will.

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

HEALTHCARE POWER OF ATTORNEY. A Healthcare Power of Attorney (HCPOA) designates another individual (typically a spouse or family member) to make important healthcare 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. A backup agent should also be identified if your initial pick is unavailable or unable to act at the time needed.

DO I NEED AN ESTATE PLAN? If you own a house and/or have kids, you should have an estate plan. Estate planning can be done no matter what your financial status as it includes important information like naming guardians for your underage children and ensuring your assets go to your named beneficiaries.

WHAT HAPPENS IF I DIE WITHOUT A WILL? If you die without a Will, state law will determine who will inherit your possessions and assets.

THE BOTTOM LINE. A Will is a great place to start, but it's only the beginning. 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.

If you have estate planning questions or are interested in talking about making a Will, Durable Power of Attorney, or other documents, 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, by phone, or via video conference.