What are the five components of estate planning?
This is a great question because a lot of times people come into our office and they have a preconceived idea of what estate planning is. And usually that means that they think it's something that happens after they're passing.
The five components of estate planning are a Revocable Living trust, a pour over will, a power of attorney for your finances, a health care power of attorney for your health and you're advance directive. And usually along with that advanced directive and in the health care power of attorney, you have your HIPA authorization.
Why are these documents important?
So what do each of these documents do, well we've covered them in other videos?
What is a revocable living trust?
But real quickly, a revocable living trust is a document in which you put all of your assets in So think of it as a bucket and you title that your house in the name of the trust. You put your cars in the name of the trust, you put your bank accounts. Anything that has a title on it, you title it in the name of your trust. Now, the advantage is, is that if you were to become incapacitated or even if you are to pass away, your successor trustee simply steps into your shoes as the successor trustee and distributes or administers your assets if you're still alive according to your wishes.
The benefits of these documents
And this is fantastic because it usually means that there does not have to be a guardian appointed which means something that happens at the courthouse in order to administer your assets while you're living. And it also means you probably are going to avoid probate after you pass away because again, your successor trustee is going to administer your assets according to what's in that revocable living trust.
The purpose of a pour over will
The next thing is the pour over will. And you might think, why do I need a pour over will if I have a revocable trust? Well, sometimes people accidentally leave a bank account or they leave a house or a rental house or rental property out of the trust so that one particular asset will need to be probated. So we need a legal document in place that says if there has to be a probate for whatever reason, I want you to put whatever asset that is into the trust. So the successor trustee can administer it according to the terms of the trust.
The Power of Attorney
The power of attorney for finances is exactly what it means. It is giving somebody the authority to have control over the assets that are not in your trust. Why this is important is because sometimes we'll see people go out and buy an investment like a property or stock or something, and they forget to title it in the name of their trust. So the power of attorney, if you were to become incapacitated, can make sure that that asset is transferred from your individual name to the name of the trust prior to you passing away and thus avoiding probate for that one asset. So that's very important to have that power of attorney in place, even if you have a revocable living trust.
Health Care Power of Attorney
The next thing is health care power of attorney. And again, it is somebody who you trust implicitly to take care of your health care. And along with that. Like I said earlier, we do your advance directive, which means if you're in a persistent vegetative state, what do you want to happen? Do you want to continue to get food, water, pain medication, or artificial means of survival? You get to make all those decisions in your health care, power of attorney, advanced directive and your HIPA authorization.
Important to get your Estate Plan in order
So those are the five components of estate planning. I know I've thrown a lot at you today, so that's why we've prepared our free guide on estate planning. I'll put a link to it in the description below and in the comments section below that so that you can download it and get started in the right direction and to help you out even more. Watch this video up here and this video up here. If you enjoy this video, then guys please smash that subscribe button and click on the like button and also click on that little bell so you'll get notified every time we post a new video. Have a great day and an awesome week. And as always, thanks for watching.
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Cortes Law Firm
5801 Broadway Extension Hwy Suite 110
Oklahoma City, OK, 73118