Q4: What documents make up an estate plan?

A4: The primary estate planning document is your Last Will and Testament. This document names your executor and sets forth how your probate assets are to be managed and distributed. Other estate planning documents include the beneficiary designations on your life insurance policies and retirement accounts (such as an IRA or 401(k)). These assets don’t flow through a Will but rather are controlled by the beneficiary designations on file with the plan or policy administrator. It is important that these assets be considered in any estate plan. Your will can also name a legal guardian for any minor child and establish testamentary trusts for a spouse or children.

Example. John wants his children to inherit equally in his estate. John drafts a Will that names one of his children as executor and directs that all assets are to be divided equally. John’s assets include his house (which is titled in his name alone), a bank account, a 401(k), and a life insurance policy. The 401(k) was set up years ago naming just one of John’s sons as beneficiary. The life insurance policy names all the children but accidentally names one child as primary beneficiary and the others as contingent beneficiaries. If the beneficiary designations are not changed as to the 401(k) and the life insurance, John will not achieve his wish of equality (because his Will does not control these assets) and instead may in fact create a lot of disharmony within his family.

Q5: What happens if I die without a Will?

A5: By law, all states provide a default estate plan for their residents. These laws are referred to as the laws of intestate succession and direct what happens if someone dies without a Will. Generally, non-probate assets such as life insurance policies and 401(k) plans also provide for what happens in the event the owner fails to name one or more beneficiaries.

Q6: What are some of the problems caused by dying without a Will?

A6: Dying without a Will may require a special, potentially costly, proceeding to appoint an Administrator. The probate process itself may be more costly and time consuming than it needs to be. A bond may be expensive and otherwise unnecessary. A lack of certainty may create family problems that may cause litigation. Overall, the process will be out of your control and the results may not be what you intend.

Q7: Do I need a Trust?

A7: Depends.  Trusts are valuable tools when it comes to an estate plan.  A Trust is essentially a contract between three parties: the person creating the trust, the beneficiaries of the trust, and the fiduciary charged with administering the assets in accordance with the terms of the trust and applicable law.  Living Revocable Trusts are particularly useful as an asset management and transfer tool.  Trusts are not a one-size-fits-all solution and should be discussed with your attorney.

Q8: What other documents are needed to plan an estate?

A8: In addition to a Will, you should consider naming a Healthcare Representative to make medical decisions for you. You should also consider naming an attorney-in-fact to manage your finances should you become unable to manage them yourself during your lifetime.

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Last Updated May 2024