Five Simple Components of an Estate Plan

Estate planning is one of those topics that often makes people uncomfortable. Most of us don’t want to think about what’s going to happen after we die, or some of us feel like we don’t have enough assets to warrant needing an estate plan. The truth is everyone needs a plan. Your estate is comprised of everything you own — your car, home, other real estate, checking and savings accounts, investments, life insurance, furniture and other personal possessions. So, no matter how modest your estate might be, you’ll still want to manage who receives each item and when they receive it. You’ll also want to include medical and financial directives so others know your wishes. Here are five simple components of an estate plan.

1. Will

A will is a legally binding document that outlines a plan for how your assets will be divided after your death. If you don’t have a will, in most states, your assets will be distributed to your first family member. Writing a will provides peace of mind by ensuring that your financial assets will be in order and disseminated per your instructions. Some states require witnesses to a written or typed will.

2. Durable Power of Attorney

A Durable, or Property power of attorney (POA) allows an appointed person to act on your behalf for financial or legal purposes if you become incapacitated and unable to do so yourself. Without a power of attorney document, no one will have the authority to step in and handle bill-paying, investment decisions and other financial matters. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. Note that some financial institutions require a POA on their own forms, so be sure to inquire when planning for yourself or a loved one.

3. Medical Directives

Medical directives can include a number of different documents but should at least include a Health Care power of attorney and your Living Will. A Health Care power of attorney (HPOA) is a signed legal document in which you name a single person as your health care decision maker, in the event that you can’t make decisions yourself. A Living Will outlines your wishes regarding medical care in the event that you are incapacitated, terminally ill or unable to communicate. Your Living Will also includes decisions about whether or not you wish to opt for life support or any life-sustaining medical intervention.

4. Beneficiary Designations

As part of your estate planning, check to make sure your retirement and insurance plans’ beneficiary designations are up to date. The only way to control where your retirement and insurance assets go is to name a beneficiary.

5. Trust

A Trust can take many forms, and may or may not apply to your personal situation. It is best to have a financial plan and meet with an estate attorney to determine if it applies to you.

Estate planning need not be a scary project, and you may find peace of mind once you know your personal wishes and concerns are in order. Those who have dealt with the death of a family member who didn’t have an estate plan will attest to the difficulties they faced in settling the estate of their loved one. Consult a financial advisor to address your personal planning needs.


Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.

"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.

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