You might think of an estate plan as a plan for your assets after death. In reality, an estate plan encompasses so much more than that. Certain parts of your estate plan might even kick in while you’re still alive. And yes, this is something everyone needs, at any age. An estate plan is not just for the wealthy or elderly.
Generally speaking, all estate plans should include the following five documents.
A will. A will sets forth your wishes regarding who should inherit certain property, and also allows you to make a plan for the custody of underage children. You can even use a will to plan for your pets.
Alternatively, a trust allows you to transfer assets in a way that can limit estate taxes and avoid probate. You can even transfer assets into the trust before death.
Durable power of attorney. Due to unforeseen circumstances, you could become incapacitated and unable to carry out certain legal and financial tasks. A durable power of attorney designates someone to conduct those activities for you.
Healthcare power of attorney. You can also designate someone to handle medical decisions for you, in the event that you are unable to understand or communicate. Choose someone who shares your views on topics like life support. This should be someone you trust, and who will likely make the same decisions you would.
Beneficiary designations. In the event you pass away, whom do you want to inherit your retirement account, life insurance benefits, cash in the bank, and other assets? Beneficiary designation forms should be kept current, or else a probate judge will make these decisions.
Letter of intent. Do your beneficiaries and executor know the full extent of your final wishes? A letter of intent informs them about plans for your assets. You can also list details for your funeral and any other final instructions that you wish to share.
Everyone should have an estate plan in place, but this issue becomes more important as we get older. Before you retire, make sure you’ve addressed the above considerations, and meet with an estate planning attorney to ensure that your wishes will be followed.
Estate Planning: Important Documents to Have in Place
