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6 Documents You Might (or Might Not) Need in Your Estate Plan

June 30, 2020 Estate Planning

1. A Will

A will is perhaps the most well-known type of estate planning document, and with good reason. Even if you use other tools to transfer the majority of your assets outside of probate, having a will can still serve a number of important purposes. For example, in Texas, you can use your will to identify your personal representative and specify the type of probate administration that should be used to close your estate, and you can use a “pour-over” provision to ensure that any assets not covered by your other estate planning documents will not be subject to intestate succession. Contact one of our McKinney estate planning lawyers to discuss your options.

2. A Revocable Trust

A revocable trust (also known as a “living trust” or “revocable living trust”) is an estate planning tool that can be used to transfer assets outside of probate. Revocable trusts are popular because of their flexibility and relative ease of use. If your estate planning goals change, you can modify or terminate your revocable trust during your lifetime; and, upon your death, your appointed trustee will have clear guidance for distributing the trust’s assets to your chosen beneficiaries.

3. An Irrevocable Trust

While revocable trusts are often favored for their flexibility, irrevocable trusts can provide countervailing benefits under certain circumstances. There are a variety of types of irrevocable trusts, each with unique purposes and benefits; and, in many cases, it will make sense to establish one or more irrevocable trusts in addition to using other estate planning tools. Our McKinney estate planning lawyers note the following as some of the more common types of irrevocable trusts:

  • Charitable lead trusts
  • Charitable remainder trusts
  • Generation-skipping trusts
  • Life insurance trusts
  • Qualified personal residence trusts
  • Special needs trusts

4. Beneficiary Designations

Certain types of assets can transfer outside of probate without the need to place them into a trust (although, under varying circumstances, it may still be beneficial to establish a trust). These include individual retirement accounts (IRAs), 401(k)s, brokerage accounts, and certain types of bank accounts. Once you name a beneficiary (or beneficiaries) for these assets, your beneficiary designations will control their distribution after your death.

5. Joint Title – Our McKinney Estate Planning Lawyers Can Help in These Situations

In certain situations, establishing joint ownership during your lifetime can help ensure a smooth and tax-free transfer after your death. This is a common estate planning strategy for real estate. For example, if you are married, making sure you and your spouse are listed as joint owners on the title to your home will ensure that your spouse automatically takes sole ownership of the home after your death.

6. Powers of Attorney and Health Care Directives

Powers of attorney and health care directives (also commonly known as “living wills”) are estate planning tools that allow you to specify someone to make decisions on your behalf should you become incapacitated due to an illness or injury. These are important – and often overlooked – documents that help protect loved ones from difficult situations and avoid the need to appoint a guardian following incapacity. Each state has its own requirements for creating enforceable powers of attorney and living wills, and our McKinney estate planning lawyers can ensure that your documents comply with the requirements of Texas law.