There are several elements to an estate plan that are key to your family being taken care of and your financial goals. For our Peace of Mind Planning, I referred to it as “What Tools Do You Have in Your Personal Tool Shed?”

Each component of a plan is like a tool designed to accomplish a specified task. You don’t use a hammer to attach a screw into a piece of metal equipment…although, some people in my family (who shall remain nameless to protect the guilty) have tried without success. 🙂

Start With Your Assets and Wishes

Once you take an accurate inventory of assets such as investments, real estate, businesses, insurance policies, retirement accounts, you have a good idea where to start. Then you need to figure out whom you want to inherit your assets after you pass. It’s also a good idea to decide who you would want to handle your financial affairs if you were incapacitated, and who you would want making medical decisions for you.

Documents to Discuss When You Make an Estate Plan

After you know the answers to those questions, you can start on your estate plan. An estate plan, is effective while you are alive, when you pass away, and if you become medically unable to manage your financial affairs. Typically a plan has four major elements:

• Will: When you die without a will, the state gets to decide what to do with your assets, not you or your family. If you have minor children, a will can name the person you want to serve as guardian. In Washington, the court makes the appointment under the applicable guardianship requirements and considers the child’s best interests; the will does not automatically transfer guardianship. Sources: RCW 11.130.185; RCW 11.130.215. A will is necessary even if you already have a trust, since a trust can only deal with certain assets.
• Trust—Trusts let you put conditions on how your assets, such as life insurance, property or other accounts, are distributed after you die. Tax consequences depend on the type of trust and how it is funded and administered. A revocable living trust does not, by itself, remove its assets from your taxable estate. Source: IRS Form 706 instructions: Schedule G, revocable transfers.
• Power of Attorney—This is a document that empowers a friend, relative, or trusted advisor to manage your financial affairs if you were unable to do so
• Health Care Directive—A medical care advance directive, the document that states what medical care you want to receive in extreme situations, is helpful if you are incapacitated. But it’s more effective if you have assigned a health-care proxy. This is someone who knows your wishes in advance and has been given legal power by you to make those decisions if you are unable.
• Over the past 34 years, the Law Offices of Christopher A. Benson has helped clients with estate planning. Contact our Federal Way office for a free initial consultation to discuss your goals and planning options.
• With a little bit of forethought, we can counsel you through the process to develop a plan that works best for your goals.

Related reading: Three Questions to Ask When Planning Your Estate.