What are the main components of an estate plan?

The main components of an estate plan are indeed wills, trusts, and power of attorney. Each of these elements plays a crucial role in ensuring that an individual's wishes regarding their assets and healthcare decisions are respected and executed effectively.

A will is a legal document that outlines how a person's assets should be distributed after their death. It specifies beneficiaries and can designate guardians for minor children, making it fundamental to estate planning.

Trusts are also a key component, as they allow for the management and distribution of assets during a person's lifetime and after their death. Trusts can help avoid probate, provide for privacy regarding asset distribution, and offer benefits in terms of tax savings and asset protection.

Power of attorney is another critical element, enabling an individual to designate someone to make decisions on their behalf if they become incapacitated. This includes financial decisions and healthcare directives, ensuring that someone the individual trusts can manage their affairs.

While the other choices mention important financial instruments, they do not encapsulate the comprehensive structure that a well-rounded estate plan provides. For instance, life insurance and retirement accounts may be part of a financial plan, but they do not serve the same holistic purposes as wills and trusts in regard to managing a person’s entire estate and making decisions when the individual can no