We all have to start somewhere.
Estate planning is no different. Whether you have a young family and are just getting started in your career or are in retirement with grown children and grandchildren that occupy your time, a properly designed estate plan will help you implement your plans for the future in a way that will help you create and leave a lasting legacy.
Estate plans are highly specific to the facts and circumstances that are unique to each family and business. This is how it should be, because you should decide what is important for your family, your business, and your legacy. Yet every estate plan should contain certain documents that will help you express your desires for the future. Each of the documents below should be included in every well-designed estate plan.
Four Essential Estate Planning Documents
Will. Everyone should have a will. Everyone. A will, in its basic form, is a document that allows you to describe how you want your estate to be administered upon your death. It allows you to specify who you want to receive your assets. It also allows you to identify the person who you want to be responsible for ensuring that your wishes are carried out. A will is also essential for parents and allows you to designate a guardian for minor children.
Revocable Trust. Many families would benefit from one or more trusts. A trust offers far greater flexibility than a will. It allows for deferred or delayed distributions, it can help your family avoid probate if properly set up, and can help keep information about your family and assets private. Trusts can also be useful tools for charitable giving, planning for children or grandchildren with special needs, passing on important values to the next generation, and of course, for minimizing taxes. A trust is also an essential tool for creating a legacy that will last for generations.
Power of Attorney. A power of attorney allows you to designate an “attorney-in-fact” who can take certain designated actions on your behalf. The document is most commonly used to facilitate financial or banking transactions and is an essential aspect of a long-term plan for potential incapacity in the future. Should you become incapacitated later in life, a power of attorney may help your family avoid the need for costly guardianship and conservatorship proceedings.
Health Care Directive. If you cannot make healthcare decisions for yourself, you should decide, while you are still healthy, who you would want to make these important decisions for you. A Health Care Directive (sometimes referred to as a Living Will) allows you to designate a Health Agent to do just that. In addition, a Health Care Directive allows you to specify important preferences regarding end-of life care, including whether you want to be considered for organ donation and whether you want to be buried or cremated.
Each of these documents allows you to be proactive and make important decisions now so that your family does not have to make them for you in the future. The process will help you get organized.