Understanding the Basics of Estate Planning

Recent economic uncertainty has proven that unexpected deaths happen frequently, yet few Americans have a set estate plan in place. Are you one of those Americans?

Effectively planning your assets out occurs well before you reach old age. In fact, everyone should have an estate plan in place, regardless of age, making it important to understand the different factors that go into estate planning.


The first planning tool is to establish a will and trust. A will is a legal document that enables the testator, the maker, to transfer property at the testator’s death according to their desire. High-net-worth individuals should always have a will in place to ensure their estate is being distributed according to their preferences. One way to enforce a will is through a trust. There are a few different types of trust, such as a simple living, testamentary, revocable, and irrevocable. Each retains different characteristics, making it important to consult with an expert on which one is right for your situation. 

Durable Power of Attorney

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Another important legal document to include in your estate planning is a durable power of attorney. This form allows an individual to act on your behalf if you become incompetent or incapacitated. Financial matters are most commonly handled by a power of attorney. To obtain a durable power of attorney, you must fill out a form and submit it to the state. Certain advisors can complete a large portion of the form on your behalf. Do you have someone in mind that you would trust to become your durable power of attorney?

Living Will and Medical Directive

A living will establish the medical situations in which the maker no longer wants life-sustaining treatment. It informs physicians about the decision of a terminally ill patient. What you do and do not want regarding your medical treatment is detailed in a living will. This is important if you become incompetent or incapacitated. Dementia patients, those near the end of life, and terminally ill individuals commonly create a living will and medical directive. 

Healthcare Power of Attorney

Similar to a durable power of attorney is a healthcare power of attorney. The designated healthcare power of attorney controls all medical decisions when you are unable to do so, including treatment options and medication. A durable power of attorney generally controls the finances while a healthcare power of attorney makes important decisions surrounding your medical health. Both are necessary to accurately control aspects of your life when you are incompetent or incapacitated. 

Beneficiary Designations

Beneficiary designations directly contrast your will, allowing you to transfer certain assets directly to chosen beneficiaries. These elections are commonly found for certain accounts or policies. For example, let’s say you want your life insurance policy to go directly to your daughter, but the rest of your estate to go to your son. In this case, you would have a will for the estate and a beneficiary designation for your life insurance policy. Although favoritism in your family might create added rifts, you can be sure your assets are distributed to the right people with a beneficiary designation.

Guardianship Designations

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Like a beneficiary designation, a guardianship designation gives you the ability to select an individual for a certain task. Guardianship designations appoint an individual control over the estate, allowing them to make judgment calls on distributions of assets when there are no other legal documents. A guardianship designation can occur before death when you become incapable of handling your own affairs. Finding a trusted individual to appoint is a key aspect of estate planning. 

Letter of Intent

Adding to the list of important legal documents is a letter of intent. This document is an outline of your estate and includes other components, such your will. Basically, this letter gives a rough outline of how you want your estate to be distributed and other intentions upon death. Your will, power of attorneys, and designations should all support the letter of intent. 


High-net-worth individuals need to engage in proper estate planning to reduce the risk of unintended distributions upon death or disability. Enlisting the help of a financial advisor is recommended to work through all the situations and legal documents, making BLU financial planning your go-to expert. Reach out today for more information. 

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