There are a few key elements you should include in your estate plan for maximum protection. Not only do these items make your wishes clear and plan for taxes, but they can also reduce the stress of decision-making on your family.

With an estate plan in place, there will be directions for how your assets are to be divided and distributed among your beneficiaries upon your death. Without a plan in place, your estate will be distributed through a formula used by the state, which may depart from your wishes.

An estate plan also prepares for the taxes that must be paid from your estate. While Texans do not have to pay estate taxes, federal estate taxes may be required if the estate is valued above the most recent year’s threshold.

An estate plan tells your family and the state how your assets should be handled after you pass away.

Your estate plan could include one or more documents and vary in complexity depending on your estate and wishes.

Wills

A last will and testament outlines your estate and how you want your assets distributed among your family members.

If you die without a will, the state’s intestacy laws will divide your assets among your closest living family members in the amounts specified by the law. However, with a will in place, your estate will be distributed in accordance with your wishes.

Trusts

A trust acts as a separate entity and allows you to put assets in it to be distributed after your death. A trust is generally managed by you or a trustee, depending on what kind of trust you have. It allows your estate to bypass probate for any of the assets held in trust.

There are also different types of trusts, the most prominent of which are revocable and irrevocable trusts. Which one you choose will depend on your specific needs and goals, its purpose, and tax obligations.

Power of Attorney

Whoever you name as your power of attorney has the authority to manage your finances, pay bills, and make decisions on your behalf. The power of attorney document will outline the scope of their authority and responsibilities in accordance with your directives.

This individual is legally only allowed to act within the capacity you assign them. The purpose of this document is to make sure you have someone who can carry out your wishes and manage your affairs when you cannot. It is essential to choose a trusted individual to avoid abuse of power.

Medical Directives

In an estate plan, advance and medical directives allow you to choose who will make decisions about your health care in the event that you are incapacitated. There are different types of directives that you can choose from.

For example, you can have a directive to a physician stating your medical wishes, or you can assign a medical power of attorney to make medical decisions for you. You can also elect to institute a do-not-resuscitate order.

A complete estate plan makes your wishes clear, plans for taxes, and reduces stress for your family.

Other Estate Planning Considerations

Estate planning involves making decisions about who your beneficiaries will be, as well as who will carry out your wishes. When it comes to the latter, it is advised to choose individuals you trust and who have the capacity to execute your estate plan. You should carefully consider who this will be and how much authority they have.

When preparing to plan your estate, you will also need to gather all relevant documents about your finances, assets, debts, identity, and beneficiaries for your to review.