When they hear the phrase “estate planning”, many people assume that the information that follows is for the wealthy. After all, most people don’t think of their money and property as an estate.
But estate planning isn’t just about who gets what when you die. It also covers things like who makes decisions about the medical care you might need at the end of your life and even how your family will pay for your funeral.
For these reasons, estate planning is important for everyone— not just the super wealthy. It’s a process that allows your family to know your wishes if you’re usable to convey them yourself and have access your important records and assets. Once it’s done, it could give you the peace of mind that there’s a clear road map for the people you love to carry on without you.
The 4 estate planning documents you need
Here are four documents that can help cover your estate planning needs.
Last Will and Testament
This might seem obvious, but a standard Will is the most comprehensive way to handle your estate after death. This is a legally binding document that spells out how your money and possessions will be divided and who should take care of your children in your absence, among other things. If your finances are simple, a standard Will kit may do the trick, but for more complicated estates it may be best to seek professional legal advice.
When writing a Will, you’ll select an executor—someone who will be responsible for making sure your wishes are carried out. This can be anyone you choose, such as an attorney or family member. Being an executor is no small task, so if you ask a family member, make sure they understand what will be expected of them.
You’ll select the beneficiaries who would receive your money, your house and any other belongings. If you have minor children, you’ll also pick guardians for them. It’s best to have a list of preferences for guardians, in case your first choice is unable to take on the responsibility of a child at the time.
Durable Power of Attorney for Finances
This document allows someone to step in and help manage financial decisions if you are incapacitated or unable to do that yourself. This might include responsibilities such as paying bills, managing investments, dealing with loans, tuition, memberships and any other financial obligations.
Without this document, your loved ones might have to go to court to get the authority to handle your affairs. Though trusting someone with all of your finances might seem a little uncomfortable (How do you know that person will do the right thing?), the person who you name in your Durable Power of Attorney is held to very strict laws and must legally put your needs first.
An Advance Directive
This document helps spell out your personal healthcare instructions. In it are all of your medical treatment wishes and what you want your end-of-life care to look.
Here you can lay out treatments you’re interested in pursuing and any procedures you’re opposed to being done to you. This might include what you would want doctors to do to extend your life, how you feel about organ donation, or what you consider to be undesirable procedures.
An advance directive can also be used to grant someone Durable Power of Attorney for Healthcare. As with your finances, you would designate a trustworthy person (typically a spouse or family member) to make medical decisions for you if you are unable to do so yourself. The person you select for this responsibility would be acting under the guidance of your advance directive.
Even though you may have a clear view or plan on how you want your care to be implemented, make sure you select someone who shares your views on treatments and end-of-life care, so they can make the right decisions should an unanticipated issue arise.
The last thing you probably want your family to stress about when you pass is how to cover the costs of celebrating your life. To help take care of all the funeral details, you might consider a funeral insurance policy. Funeral insurance can quickly pay a benefit amount to your chosen beneficiary, so your family and friends can focus on celebrating your life without worrying about the price tag.
Estate planning is so much more than deciding how you want assets divided when you pass on. It’s the ultimate gesture of consideration for your family and friends, giving them a clearer blueprint for your end-of-life care and beyond. As with any legal documentation, you may want to consult with qualified professionals as you make your plans, so everything can go as smoothly as possible for those you love most.