The best estate plans are drafted to meet specific goals. They use just the right combination of tools and strategies. But before you set your goals, you might first want to learn more about what an estate plan can do.
You may have already heard that there’s more to an estate plan than your will. There are plenty of other tools you can use. These include trusts, powers of attorney and advanced health care directives. Combined, they can do a lot more than simply transfer assets. Here are five other things your estate plan can do:
Name a health care proxy and define your health care wishes
Most people decide to draft estate plans after thinking about how their deaths may someday impact their families. However, death isn’t the only situation that can dramatically change the way you’re able to relate. An advanced health care directive can anticipate the cases in which your health may fail and incapacitate you. You can appoint someone to care for you and make sure your health care wishes are clear even when you’re unable to voice them.
Give others the legal power they need to help you
If you’re incapacitated or otherwise unavailable, you may have more concerns than just your health. Assigning durable power of attorney to someone you trust can empower them to make critical legal decisions on your behalf.
Create an enduring charity
With a will, you can assign a chunk of your estate to charity. With a charitable trust, you can fund your favorite charity, and there may even be some immediate tax benefits for you. As Forbes notes, the recent tax changes made charitable trusts more compelling, and they may be worth pursuing even outside of an estate plan.
Preserve the value of your estate
Probate can be costly. It may subtract as much as 7% from the value of your estate. The right combination of assets, joint titles, insurance policies, trusts and other entities can help preserve your estate from the costs of probate. The greater the value of your estate, the more likely you’ll want to review the possible strategies that you can use to pass your wealth to future generations.
Protect your children’s best interests
In the case of minor children, you might name guardians to care for them in case anything should happen to you. You might also place money into trust funds for their medical expenses and education. If your child has special needs, you might create a special needs trust. And some parents create plans that schedule payments or award them only when adult children meet certain criteria such as completing alcohol rehabilitation.