Many people think one will is enough. In reality, a complete estate plan usually includes several documents that work together. When these documents are coordinated, they can help reduce gaps, conflicting instructions and avoidable problems for your family.
Wills and trusts
A will explains how an estate should distribute certain assets after death. It can also name a personal representative and nominate a guardian for minor children, subject to court approval. Under Maryland law, the testator generally must sign a will and two or more credible witnesses must witness it.
A trust can hold and manage assets according to your instructions. Depending on how a grantor creates and funds it, a trust may allow some assets to avoid probate. A revocable living trust may also help manage trust assets if you become incapacitated.
A pour-over will can direct assets left outside the trust at death into the trust. Even so, those assets may still need to go through probate before the estate transfers them. Maryland estate and inheritance taxes may also affect your plan. Maryland has an estate tax, and some close relatives are exempt from inheritance tax.
Powers of attorney and healthcare directives
A financial power of attorney lets someone you choose handle financial matters for you. Depending on the authority granted, that person may be able to pay bills, manage accounts and handle property matters.
A Maryland advance directive lets you name a healthcare agent and give instructions about medical treatment. For many people, it is one of the most important incapacity planning documents. In some serious medical situations, Maryland also uses a MOLST form to communicate treatment orders to healthcare providers.
Without these documents, family members may need a guardianship or another court process to make decisions for you.
Beneficiary designations
Some assets pass by beneficiary designation instead of by will. Common examples include retirement accounts, life insurance and some bank accounts.
That means a will or trust does not automatically change a beneficiary form. If the beneficiary designation and estate plan do not match, the result may be different from what you intended.
How to review your estate plan as a whole
Your estate plan works best when all of the documents support the same goals. Reviewing your will, trust, powers of attorney, advance directive and beneficiary forms together can help spot outdated instructions, missing assets and conflicts.