This Job Needs a Tool: Essentials to building a strong estate plan
The one thing in my house that gets more use than diapers? Books.
This week’s favorite: This Job Needs a Tool. In its rhythmic fashion, the book introduces a lineup of essential tools—hammer, wrench, pliers, saw, tape measure—all ready to "get the job done".
So why am I talking about a children’s book?
Because estate planning works the same way. You have multiple tools at your disposal and it is important to know how they work independently and how they can work together. Your estate plan may require multiple tools, each serving a specific purpose, but together, they create a plan.
"Everywhere you look there is a job to do! And for every job, there's a helpful tool. Here are my tools aren't they fun? They're ready to get jobs done!"
5 Essential Estate Planning Tools
1. Wills: A will is your instruction manual. It outlines who inherits your assets, appoints guardians for your minor children, and names an executor to carry out your wishes. Without a will, the state makes these decisions for you.
2.Trusts: Trusts are versatile tools that hold and manage assets on behalf of beneficiaries. They can be tailored to meet specific goals, such as minimizing estate taxes, avoiding probate, or providing for a beneficiary with special needs. Common types include:
- Revocable Living Trusts: Allow you to maintain control over your assets during your lifetime and specify their distribution upon death, all while avoiding probate.
- Irrevocable Trusts: Once established, these cannot be altered without the beneficiary's consent and can offer benefits like asset protection and tax reduction.
3. Power of Attorney: This legal document grants a trusted individual the authority to make decisions on your behalf, particularly if you become incapacitated. There are two primary types:
- Durable Power of Attorney: Empowers someone to handle your financial matters, such as paying bills, managing investments, and overseeing property.
- Healthcare Power of Attorney: Allows a designated person to make medical decisions on your behalf when you're unable to do so.
4. Advance Healthcare Directive (Living Will): This document specifies your preferences for medical treatment in situations where you're unable to communicate your decisions. It addresses scenarios like life-sustaining treatments and resuscitation efforts.
5. Designations (Beneficiary & Guardianship): Some of the most important estate planning decisions involve who will receive your assets and who will care for your minor children if something happens to you.
- Beneficiary Designations: Certain assets, such as life insurance policies, retirement accounts, and payable-on-death bank accounts, allow you to name beneficiaries directly.
- Guardianship Designations: For parents with minor children, it's vital to nominate guardians who will care for them in the event of your passing. This ensures that your children are raised by individuals you trust and who align with your parenting values.
Working Together
At the end of This Job Needs a Tool, the reader is faced with a challenge. Without spoiling it, multiple tools are required to fix the job. Estate planning is the same. A will alone won’t protect your assets. A trust alone won’t appoint guardians. The tools must work in unison to create a comprehensive plan.
At HootOwl Legal, we don’t just hand you a set of tools—we help you use them to build an estate plan that protects your family, your assets, and your nest.
If you need help getting started with estate planning, we’re here to guide you. Contact us today or visit our website for more resources.
HootOwl Legal is an estate planning firm that provides a holistic and approachable legal experience. We help empower families and individuals with the knowledge of the entire process; what is an estate plan, why you need one and how they can evolve over time.
Macaroni Kid Rogers-Bentonville is a free resource for Northwest Arkansas families. We appreciate sponsors like HootOwl Legal who enable us to provide this resource.
