Estate planning in Tulsa, Oklahoma can be complicated. Part of this difficulty is learning the different elements of estate planning and how they differ from each other. While certain terms and concepts may seem similar, they can differ in practice. Overall, it’s always good to educate yourself on every aspect of estate planning.
What are the three major components of estate planning?
There are three major components of estate planning that serve different functions. They should all be part of any significant estate plan:
• Advance directives
• A will
What are advance directives?
Advance directives are legal documents that can help enact your desires after you pass away. While they may seem to be the same thing as a will, advance directives include other documents such as a power of attorney, instructions for healthcare and a living will. Unlike a traditional will, a living will includes instructions for how a person should be cared for if they can no longer communicate due to a debilitating health condition.
What is a final will and last testament?
Second, you should learn about drafting a final will and last testament. This is traditionally what is referred to by a will. It is an advance directive but differs from a living will and an advance directive. The final will and last testament will include specific instructions for how the deceased’s wishes should be enacted after they are gone. This can include information on who should inherit what property, assets or even the guardianship of children. The drafting of a will is required to ensure your estate is not contested in court.
What is a trust?
Lastly, trusts are something else that should be created during the estate planning process. A trust can be thought of as a financial vehicle used for holding onto wealth or assets for a specific period of time before beneficiaries can have access to them. Think, for example, if you have young children that will only reach college age 15 or so years into the future. A trust could be used to hold money for college expenses until that period. Trusts are maintained by a third-party trustee and can continue operating long after a person has passed away.
Overall, while the terms advance directives, trusts and wills may seem similar, they all operate very differently. Make sure to consider all three during your estate planning process. They can certainly help ensure that your will is adhered to even after you are gone.