While no one wants to think about the end of their life, specific steps should be taken to ensure that loved ones are provided for long into the future. Estate planning represents proactive steps that make lives easier for survivors suffering a devastating loss.
Estate planning is not exclusively for the wealthy. An effective strategy should include the following documents:
Wills and Trusts
A well-drafted will that follows state law ensures that your wishes will be carried out. Wording should be precise so that specific property is distributed based on your preferences. Trusts can help minimize estate taxes or legal challenges.
Durable Power of Attorney
A durable power of attorney (POA) assigns someone you select to make decisions when you are no longer able to, including financial transactions and other legal decisions. Without a POA, the court will rule on what happens to your money and possessions if you are deemed mentally incompetent.
Healthcare Power of Attorney
A healthcare power of attorney (HCPA) assigns a person of your choosing – most likely a spouse or other loved one – the authority to make vital healthcare decisions should you become incapacitated. Selection should be carefully considered with a preference towards someone who shares your views and would make a plan that you would find suitable.
Not all wills and trusts have a clause that specifically designates guardians for minor children not yet 18 years old. The document selects a loved one that should share your views and is financially sound. Most importantly, they have to be agreeable to raising your children. The document should also have contingency plans for a backup guardian.
Life is unpredictable. Estate planning provides you with power, if not a voice in how your assets are distributed and who cares for your children.