One way to start out the new year is create an estate plan. Everyone should have an estate plan and should know what to include in their estate plan. There are several key documents to consider including in an estate plan.
Durable power of attorney for financial affairs
This document is used for the estate planner to name an agent to act on their behalf for their financial affairs. This is useful if the estate planner becomes ill or is in an accident and is unable to manage their financial affairs themselves. The agent may need to pay the estate planner’s bills, care for the estate planner’s home or handle administrative concerns for them.
Healthcare power of attorney
This document is similar to a durable power of attorney for financial affairs but is used for healthcare concerns. The agent will be able to make healthcare decisions for the estate planner if they are unable to make them for themselves. Healthcare decisions the agent may make for them can include placement decisions and life-sustaining treatment in terminal situations.
Last will and testament
A will allows the estate planner to direct with specificity the distribution of their assets. It also lets them specify who they want their assets to go to which is why beneficiary designations are important. Other beneficiary designations, including on life insurance policies and retirement accounts, are also important.
Estate planners may also want to consider including a trust as part of their overall estate plan. Estate planning is not one-size-fits-al which is why estate planners should know about the different estate planning documents they should consider including in their estate plan.