Everyone needs an estate plan. Even a handwritten will is better than nothing: if you don’t make the decisions, somebody else will decide for you, and oftentimes the taxman or the courts. Developing an estate plan is about taking control.
Your estate plan should clarify:
- Who will inherit your assets, including your investments, real estate, business, jewelry, art, everything.
- Who will take care of your children, if they are minors.
- Who will make legal, financial and healthcare decisions on your behalf if you become incapacitated.
Common Types of Estate Planning Documents
Will: A legal documents that expresses your wishes regarding the distribution of your assets, who will manage your estate until distribution, and the care of any minor children.
Trusts: A legal entity that allows a third party, the trustee, to hold assets on behalf of a beneficiary. There are many types of trusts, and they provide different types of protection.
Power Of Attorney: A document appointing a trusted person to act as your legal agent, if you can’t manage yourself. The document is effective while you are alive.
Health Care Proxy: A document authorizing a third party to speak and make medical decisions on your behalf should you become incapacitated. If your physician determines you are incapacitated, the proxy comes into effect.
Living Will: An advanced directive that goes into effect if you are incapacitated. It leaves instructions for medical care and end of life wishes. It does not authorize anyone to make decisions for you.
Creating your estate plan is just the beginning. It needs to be periodically reviewed an updated. Significant life events like a marriage, the birth of a child, a change in your financial or health situation are all times for a review. Your financial advisors and close family should know who has a copy of your will and where copies of all your important documents are. Proper estate planning is the most important gift you will ever give to those who matter most to you.