Creating an estate plan is one of the most important steps you can take to secure your family’s future. It can provide peace of mind, knowing that the people who are important to you will be cared for if you die or become incapacitated.
While every person’s estate plan is unique to their situation, some elements should be included.
1. Will
Your will is the cornerstone of your estate plan. It outlines who inherits your assets and property when you die. You can also name a guardian for minor children.
2. Powers of attorney
Powers of attorney (POA) allows you to appoint someone to manage your financial affairs and make medical decisions on your behalf if you become incapacitated.
3. Advance healthcare directives
This document outlines your wishes for end-of-life care, such as life support and do-not-resuscitate orders.
4. Trusts
Trusts are legal arrangements that allow you to assign a trustee to hold and manage assets for the benefit of another person or organization. There are several reasons to include a trust in your estate plan, including avoiding probate, reducing taxes and protecting assets from creditors.
5. Beneficiary designations
Some assets, such as life insurance policies, retirement assets, and investments, allow you to name beneficiaries who will directly inherit the asset without it going through the probate process.
6. Letter of intent
Though not legally binding, a letter of intent is a document that contains important information not covered in the other parts of the estate plan. It could include funeral arrangements or specific requests.
To make sure your estate plan covers everything and is legally binding, you want to work with someone to ensure all of the elements are adequately addressed.