Estate planning can be simple or complex depending on your particular circumstances. However, there are certain basic documents that everyone should consider preparing to ensure their wishes are carried out should they become incapacitated and in the event of their passing.
Will or Trust. Both of these documents specify who will receive various assets upon your death. They can include homes, savings and investment accounts, personal effects (like collectibles, jewelry and furnishings), businesses and even intellectual property. You can use either a last will and testament or a trust to accomplish this, although there are important differences in terms of privacy considerations and probate depending on which option you choose. It’s also important to specify guardians for any minor children.
Advanced Directives. Also called a living will, this outlines what medical and supportive treatments you want administered and which you want withheld in the event you’re unable to communicate your wishes. While unpleasant to think about, consider the burden you’re lifting from loved ones if they ever have to consider removing a feeding tube or ventilator.
Durable Healthcare Power of Attorney. This document assigns a healthcare proxy and can be useful for decisions not specifically enumerated in the living will. The healthcare proxy is able to speak with doctors and access your private health information to make medical decisions on your behalf.
Durable Power of Attorney. You can use this document to appoint an agent to handle your financial affairs should you become incapacitated. This person can pay your bills, deposit or withdraw money from bank accounts and sign financial documents for you. Without one, your loved ones may face a lengthy and complicated court proceeding to petition for guardianship or conservatorship.
Beneficiary Designations. It’s important to designate beneficiaries for all retirement accounts (401(k)s, IRAs, etc.) and life insurance policies. Contingent beneficiaries are named in the event that the primary beneficiary is deceased at the time of your death. If there are no named beneficiaries, the court system will decide who will receive these assets.
Letter of Instruction. While this document does not carry the legal authority of a will, it can be a useful means of communicating your wishes to loved ones after you pass away. You can include your preferences for funeral arrangements, locations of important paperwork, recipients of sentimental items with little value and even just a final message to those you love.
How to Proceed
Ideally, you should engage an experienced estate planning attorney who is an expert in the laws and regulations of your state. He or she can also help you examine any particular aspects of your specific situation that might impact your plan. However, you can also use an online legal service like LegalZoom or Rocket Lawyer to prepare basic documents — but whichever manner you choose, the most important thing is that you tackle this critical task.
Sources