Thinking about death is unpleasant. However, when it comes to guarantees in life, it’s one of the few you can count on. A properly prepared estate plan can take some of the uncertainty out of your money's future.
Estate planning needs differ a lot between individuals. However, most Americans can benefit from having these four documents in place, says The Ascent’s recent article entitled “4 Estate Planning Documents Everyone Should Have.”
- Last Will & Testament. A will directs the disposition of your assets and allows for specific bequests, such as a gift of sentimental value. For those with minor children, guardianship is established in the will in the event both parents die.
- Financial (Durable) Power of Attorney. Powers of attorney typically spring into effect upon incapacitation. This document lets someone represent an incapacitated person in certain financial matters, paying bills for you if needed, etc.,. Be aware, however, - just because you are incapacitated does not mean you get out of filing your tax return!
- Health Care Power of Attorney. This document gives an attorney-in-fact (also known as agent) that you appoint, the right to make healthcare-related decisions for you, in case you become incapacitated. Rights given to an attorney-in-fact through a healthcare power of attorney include speaking to medical professionals about your care, deciding on treatment—even deciding to stop your treatment in a coma or vegetative state. Appointing an attorney-in-fact is obviously a big decision, and a large responsibility for the attorney-in-fact. As a result, it’s important to establish a living will to guide their decision making.
- Living Will. This is also sometimes referred to as an advance directive. This document provides guidance to both healthcare professionals and those appointed as your attorneys-in-fact. Supplementing an estate plan with a living will can ensure that your final wishes are known and executed and can prevent a great deal of agony for those making decisions regarding your health care. It is crucial to talk to your appointed agents about what your wishes would be in certain situations, so that they can serve as your 'voice' in those instances, and not be forced to guess about what you would actually want if you were unable to communicate those things to a doctor or medical professional yourself!
An experienced attorney should speak with you about your personal and financial circumstances and draft a will in accordance with your wishes.
Reference: The Ascent (May 13, 2022) “4 Estate Planning Documents Everyone Should Have”