Estate planning is a vital aspect of preparing for the future, ensuring that your wishes are carried out and your loved ones are provided for after you're gone. While drafting a will is a crucial component of this process, it's equally important to understand what should not be included in your will.
This is because of two issues concerning wills: First is that a will is typically read about a week after death. Items that must be dealt with before you die will probably remain unknown until the will is read. By that time, you have passed away and your funeral has occurred. Anything that concerns your end of life decisions or your funeral arrangements will probably remain unknown if they are in a will.
The second issue is that there are legal restrictions on what a will controls. Designated beneficiaries will over-ride provisions in a will. Likewise property in a trust.
Here, we delve into five key elements that are better addressed outside of your will, offering clarity and guidance for a comprehensive estate plan.
Healthcare Directives:
One of the most critical aspects of estate planning involves decisions regarding your healthcare preferences, especially in situations where you may be unable to communicate them yourself. While it might seem natural to include instructions regarding life-support machines, organ donation, and other medical decisions in your will, it's actually more appropriate to establish a separate healthcare directive. This document, also known as a living will or advance healthcare directive, allows you to outline your wishes for medical treatment and end-of-life care. By clearly expressing your preferences in advance, you provide invaluable guidance to your family and healthcare providers during challenging times.
Funeral Arrangements:
Planning for one's funeral and burial is a deeply personal and emotional process. While you may feel inclined to detail your funeral wishes in your will, it's important to understand that by the time your will is read, your funeral may have already taken place. To ensure that your final arrangements are carried out according to your wishes, it's advisable to create a separate document specifically addressing funeral and burial instructions. This document should be shared with your loved ones and the executor of your estate, providing clear guidance on matters such as cremation, burial preferences, memorial services, and any specific requests you may have.
Investment Directives with Beneficiaries:
As part of your estate planning, you may have various investment accounts and financial assets with designated beneficiaries. These accounts, including IRAs, life insurance policies, and retirement plans, typically allow you to specify who will receive the proceeds upon your death. It's essential to understand that beneficiary designations supersede any instructions outlined in your will. Therefore, attempting to include these assets in your will can lead to confusion and potential conflicts. To ensure that your assets are distributed according to your wishes, review and update beneficiary designations regularly, keeping them consistent with your overall estate plan.
Organ Donation Preferences:
The decision to donate organs and tissues is a profound and life-affirming choice that can have a significant impact on the lives of others. While you may feel compelled to include organ donation preferences in your will, it's essential to recognize that wills are typically read after the funeral has taken place. As organ donation requires immediate action upon your passing, it's far more effective to communicate your wishes through a separate document, such as your healthcare directive or donor registry enrollment. By addressing organ donation preferences outside of your will, you ensure timely and efficient implementation of your wishes, potentially saving lives through the gift of donation.
Property and Assets Best Suited for Trusts:
Trusts are powerful estate planning tools that offer flexibility, control, and privacy in the distribution of assets. While your will may address the distribution of certain properties and assets, there are cases where establishing a trust is more advantageous. Real estate properties, investment accounts, business interests, and valuable personal assets can all benefit from being placed in a trust. By transferring ownership of these assets to a trust, you can avoid probate, minimize estate taxes, and provide ongoing management and protection for beneficiaries, especially in complex family situations or when minor children are involved.
In conclusion, effective estate planning involves careful consideration of various factors, including what to include and what to exclude from your will. By keeping healthcare directives, funeral arrangements, investment directives with beneficiaries, organ donation preferences, and certain assets out of your will, you can streamline the administration of your estate, minimize potential conflicts, and ensure that your wishes are carried out accurately and efficiently. By taking a proactive approach to estate planning and seeking guidance from legal and financial professionals, you can create a comprehensive plan that reflects your values, priorities, and legacy.
The information contained in this Higgins Capital communication is provided for information purposes and is not a solicitation or offer to buy or sell any securities or related financial instruments in any jurisdiction. Past performance does not guarantee future results.