What does a proper estate plan include?


A proper estate plan, of course, includes a revocable trust, which contains all the terms for incapacity and post-death planning, as well as a pour over will, which simply says, “My name is, I’m married to, my children are, and I leave everything I have them to my trust,” so that if probate administration is necessary at the end of the probate administration will have an order from the court ordering distribution of the assets to the trust for eventual distribution. We need another standby document as well, and that would be a durable special power of attorney. The durable special power of attorney would give our agents the ability to engage in any acts that we could while we were alive and well to put assets into the trust.

That’s all we need a power of attorney for. All other assets presumably are funded into the trust, and the successor trustees are able to take any actions in accordance with the terms of the trust for the benefit of the beneficiaries. In addition, a proper estate plan should have an advance healthcare directive, a directive telling physicians what to do for someone, for my client, in the end of life decision-making in a hospital setting, as well as a HIPAA authorization allowing the release of protected medical information to the successor trustees, and also to the agents under the advance healthcare directive. A proper plan also includes transfer documents to fund the trust. A trust is simply a holder. It’s going to hold assets. How do we get the assets in there? Well, we have to transfer them or re-title them. So a proper estate plan includes the documentation that a client needs in order to transfer and re-title assets into the name of the trust. That would constitute a proper estate plan.

Note: The Tax Cut and Jobs Act of 2017 signed into law in December 2017 increased the exemption amounts mentioned in these videos. The personal estate, gift, and generation-skipping tax lifetime exemption was increased to $11.18 million per person. The annual gift tax exclusion was increased to $15,000 per donee per year.

Both amounts are indexed for inflation and may increase year over year until December 31, 2025, when the law sunsets and reverts to 2017 values.