Top 5 Documents In An Estate Plan
First, what is an estate plan? When discussing estate planning, people are usually referring to how they plan to distribute their assets.
However, estate planning involves more than the distribution of one’s assets. It’s also what you owe. Your estate will need to take care of your financial liabilities before beneficiaries are paid. It should also include your wishes regarding guardianship of your children and healthcare issues.
An estate plan contains several important documents, each with a different purpose.
Here are some of the most common documents you will find in an estate plan:
- Last Will and Testament
- This document alone may be enough for some people, but a meeting with your attorney will help you determine if it is enough or if you should proceed with an estate plan. In either case, most people need a Will at the very least. In a Will, you decide who inherits your assets, you select a guardian(s) for your children, and you name an executor who will make sure your instructions are carried out. The Will is the most important part of the estate plan.
- Healthcare Power of Attorney
- You will name a person(s) who will make decisions for you regarding your medical treatment if you aren’t able to make those decisions for yourself.
- Living Will
- In a Living Will you will make the decisions regarding your medical treatment in advance and in writing.
- Financial Power of Attorney
- Unlike the Healthcare Power of Attorney, a Financial Power of Attorney will handle your finances. More precisely, it grants the person you name to have legal authority to act on your behalf for financial issues if you become incapacitated and you’re unable to make those decisions for yourself.
- Living Trust
- Many people set up what’s called a living trust. A big advantage of a living trust is that it enables your estate to avoid probate court. This is a significant advantage because the probate process could take up to several years and it can be costly. A living trust also ensures privacy since probate documents are open to the public. A Trust is more costly to set up.
A common misperception is that estate planning is reserved for the wealthy, but nothing could be further from the truth. In fact, estate planning is giving what you have to whom you want, the way you want, when you want and with the least amount of taxes and expenses possible.
There is more to estate planning than deciding how to divvy up your assets when you die. Estate plans don’t just look ahead to when you die, but they can also be instrumental for when you become sick or injured. A good estate plan will contain medical directives that express what your wishes are in the event you can no longer express yourself.