What Should Be Included in My Estate Plan?

What should be included in my Estate Plan? While the contents of your estate plan will be largely dependent on your specific situation in life, most estate plans will include the following:

• A will or trust—In many cases, an estate plan will require both a will and a trust. A will can ensure assets are properly distributed according to your wishes and can include naming a guardian for your minor children. A trust can help limit estate taxes in some cases, and legal challenges in most cases. Beneficiaries named on life insurance policies or retirement accounts will usually receive the asset outside of a will or trust.
• A Durable Power of Attorney—A Durable Power of Attorney allows a person of your choice (called an “agent”) to act on your behalf if you were unable to do so because of incapacitation. If you do not have a Durable Power of Attorney, the court may determine what happens to your assets. Under a Durable Power of Attorney, your agent can be given the power to transact real estate, enter into a financial transaction, or make other legal decisions on your behalf.
• Beneficiary designations—Beneficiary designations must be made on assets such as life insurance and retirement plans. It is important to name a contingency beneficiary in case the beneficiary you designated is deceased. If a named beneficiary is not be over the age of 18 or is not mentally competent, a guardian or a custodian under the California Transfer to Minor’s Act (CUTMA) will need to be named to act on behalf of the minor or incompetent.
• A Healthcare Power of Attorney or Advance Health Care Directive—In the state of California, a Healthcare Power of Attorney is generally known as an Advance Health Care Directive. The Advance Health Care Directive designates a trusted individual to make major healthcare decisions on your behalf in the event you become incapacitated. You should choose a backup individual to make these decisions in the event your first choice is unavailable or unable to act for some reason.
• Guardianship designations—If you have minor children, a guardian designation is imperative, since few parents would want the court to make this decision. You will choose an individual or couple who have similar child-rearing views as your own and who are not only financially sound but willing to raise the children. A contingency guardian should be named as well. Imagine if you truly cannot stand a certain relative, yet the court sends your children to be raised by that relative simply because you left no guardian designation, and you will realize how important such a designation really is.