When most people contemplate putting their affairs in order, their minds jump straight to wills and life insurance policies. While these are undeniably crucial components, they’re just the tip of the iceberg.
A carefully thought-out estate plan should incorporate a variety of tools designed to do more than distribute assets. Unfortunately, some of the most effective estate planning tools are often overlooked because they seem less urgent, are misunderstood or aren’t as widely discussed.
1. Durable power of attorney (POA)
This often overlooked tool empowers you to advocate for sound financial strategies in advance in case you become incapacitated. Many people mistakenly limit themselves in the belief that their spouse or adult children will automatically be able to step in. Unfortunately, that’s not always the case, especially when dealing with financial institutions or government agencies.
2. Revocable living trust
This unique estate planning tool empowers you to manage and distribute your assets privately without court involvement. It also lets you plan for incapacity by naming a successor trustee to step in if you can no longer manage your affairs.
You might have assumed that trusts are only for the wealthy, but that’s a misconception. You can appreciate the value of a revocable living trust if you want to streamline the inheritance process, reduce family disputes or maintain privacy.
3. Letter of intent (LOI)
This document provides written guidance to your loved ones and executors about your personal wishes. It can include:
- Funeral preferences
- Explanations of decisions made in your will
- Instructions for the care of pets or digital assets
Because it’s informal, many skip it, but a well-written letter of intent (LOI) can help clarify your values, reduce confusion and prevent misunderstandings during an emotionally charged time.
Estate planning goes beyond dividing assets; it’s also about protecting your peace of mind and making things easier for those you care about. With insightful legal guidance, you can incorporate underused tools to build a stronger, more compassionate plan.
