It can be intimidating to consider the distribution of your assets and other end-of-life decisions. No matter your health, wealth or age, it is wise to take the time to craft a comprehensive estate plan. And while it might at first seem confusing, there are only a handful of documents that must be finished to create the foundation of a strong plan.
While every estate plan is unique based on the assets and individuals involved, they all share common characteristics. For example, most experts agree that individuals should consider these five documents as the start of a strong estate plan:
- Will: The Last Will and Testament, you might also hear it referred to as a “pour over will,” gives you a chance to distribute assets that are not otherwise covered in a trust or other plan. The will can be as general or specific as you are comfortable.
- Trust: Many individuals use a revocable living trust to further clarify items. In general, a trust sets out to answer questions about what happens to assets while you’re alive and well, what happens if you become mentally incapacitated and are unable to make decisions, and what happens after you pass away. Various types of trusts can be used to set aside funds for minor children, children with special needs, pets or a family vacation property.
- Advance health care directive: Sometimes referred to as a “medical power of attorney,” the advance medical directive is put in place to allow you to designate an individual to make medical decisions for you if you become unable to make them for yourself.
- Living will: This is a document specifically created to provide instructions to a physician about whether or not you are to receive life-sustaining medical procedures. Additionally, you can use a living will to provide guidance to your family members in the event you become terminally ill.
- Financial power of attorney: Similar to the advance medical directive, you can take the time to designate an individual who will be trusted to make financial decisions should you become mentally incapacitated.
There can be numerous other aspects that an estate plan addresses, including guardianships and conservatorships. Do not hesitate to create these documents and revise them as your situation changes.