Written by: Liwin Troy Lee
Even though most estate plans are different from one another, they have similiar components. They include a will, a living will, a letter of last instruction and any trust instruments deemed necessary.
Will
The most imporant part of the estate plan is the will. A will is a legal document that transfer property when the property owner dies. The person who receives something from the estate is the heir. The will can also specify who will care for the minor children or dependent of the person who died.
In most states it is required that the assets be distributed after the person has died. If the person dies intestate, that is without a will, there are rules within each state to decide how the assets of the deceased will be distributed. If a person dies without a will and no living relatives, the assets of the deceased will become property of the state government through a legal rule called escheat.
Living Will
A living will is a document that specifies a person's preferences as to the medical care he or she would want to receive is they are unable to make the decision for themselves due to terminal illness, physical or mental disability.
The most difficult part in drafting the will is deciding what limitation to place on the medical care you're willing to receive.
A durable power of attorney is a legal document which designates that another person makes a decision for you in an event that you are unable to do so.
Letter of Last Instruction
The letter of last instruction is not a legal document. It provides useful information for the survivors of the deceased. The letter could be used to communicate the funeral arrangements, identify people to notify and important information such as bank account information. The letter should be copied and be distributed to everyone so everyone can find it when the deceased dies.
Trusts
Trust is an entity that holds and manages assets on behalf of someone else.
Sources
Top things to know
Estate Planning for Everyone
The Estate Plan
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