Estate planning involves organizing your affairs to ensure a smooth transfer of assets to your heirs upon your demise.
To navigate this process successfully, it is important to have the right documents in place.
1. Last will and testament
A last will and testament is a foundational document that outlines your wishes regarding the distribution of your assets after your death. It allows you to name beneficiaries for specific assets and appoint an executor to carry out your instructions.
2. Living will
A living will, also known as an advance healthcare directive, outlines your preferences for medical treatment if you become incapacitated. It covers decisions related to life support, organ donation and other critical healthcare choices.
3. Power of attorney
A power of attorney grants someone the authority to make financial or legal decisions on your behalf if you are unable to do so. This document is important for ensuring the management of your affairs by a trusted individual if you become incapacitated.
4. Beneficiary designations
Certain assets, such as life insurance policies and retirement accounts, allow you to designate beneficiaries. Keeping these designations up-to-date ensures that these assets transfer directly to the intended recipients without going through probate.
5. Final arrangements document
While not often discussed, detailing your preferences for funeral arrangements and other final wishes can relieve your loved ones of the burden of making these decisions during a difficult time.
As you join the ranks of the 34% of Americans with an estate plan, it is not a one-and-done situation. Regularly reviewing and your estate plan documents is a prudent practice to adapt to changes in your life.
