Most people think that if they draft a will, they have covered all the bases for what happens to their property when they die. However, there is much more to estate planning than simply drafting a will. To have a successful and effective estate plan, it must include other documents beyond a will or trust.
If you are starting the estate planning process, it is important to include a range of documents that not only financially provide for your family but also grant chosen representatives to make decisions on your behalf should you become incapacitated. Here are the most vital documents you should include in your estate plan.
Durable power of attorney
A durable power of attorney is a vital piece of documentation if you become sick or suffer an injury that leaves you unable to make your own financial decisions. More importantly, it will keep a court from making such decisions on your behalf.
Certain assets such as 401(k) retirement accounts and life insurance policies can pass directly to your beneficiaries without making special allowances in your will or going through the probate process. However, if you fail to list your beneficiary and contingent beneficiary on these accounts, the court might make the decision as to which of your heirs should inherit the funds.
Letter of intent
A letter of intent is essentially specific instructions you can leave for your executor or a beneficiary concerning the treatment of an asset. You can also use a letter of intent to lay out your wishes for your funeral service or other special request.
Health care power of attorney
Just like a durable power of attorney will allow your chosen representative to make financial decisions on your behalf, a health care power of attorney names the individual you trust to make medical decisions in case you cannot do so yourself. This document is especially important if you suffer a debilitating accident or injury that leaves you incapable of speaking for yourself.
If you are working on your estate plan, consider including the above documents to provide you and your family with further protection. Estate planning is the most important tool you can implement to safeguard your interests in case the worst happens.