Most Washington residents, if asked, would likely acknowledge that everyone should have some form of estate plan in place. Despite that, a significant percentage of adults have not taken basic steps towards accomplishing that objective. Other than a reluctance to recognize one’s own mortality, one reason for this seeming inconsistency may be confusion and lack of understanding as to what exactly an estate plan entails. Perhaps a clear understanding of the purpose the various documents in an estate plan serve will help provide greater incentive for individuals to prepare for the inevitable and better secure their future.
One misconception that financial planners regularly see is confusing financial planning and estate planning. Both are necessary and certainly interrelated, but they are not the same. Another commonly held view is that a trust is only a tool for high-asset estates, yet a trust can be valuable in saving any estate the added expense of probate and should be considered by anyone who owns real property. Although a will and a trust can serve some of the same purposes, they are not interchangeable documents, and each has different advantages.
Additionally, estate planning is not simply for sorting out financial and personal issues after one’s passing. Plans can be crafted to allow for another person to make financial decisions if they are temporarily incapacitated. Similarly, a person can nominate another to make healthcare and end-of-life-related decisions according to predetermined choices.
A will, a trust, a power of attorney for financial matters and a power of attorney for healthcare decisions are the basic estate planning documents most people should be familiar with. An experienced estate planning lawyer may explain how each functions and whether other protections need to be in place based on individual circumstances.