Three Must-Have Estate-Planning Documents
Estate planning involves more than simply creating a will. A good estate plan includes all of the necessary documentation to tell your family, and the court, how to divide your assets, your funeral and burial wishes, and care instructions in the event that you become disabled before death. Because an estate plan covers so many different aspects of your life, there are several documents that you need to include. While your individual estate plan might involve more documentation, you need to make sure these documents are included in your plan.
Will or Trust
Your will is probably the most important document in your estate plan. Your will tells your family and friends how you want your assets divided after your death, and also identifies a guardian for any minor children. Alternatively, you can create a trust. If you create a trust, all of your assets go into the trust after your death. The executor of your estate has control of the trust and can distribute your assets as needed. Not only does creating a trust eliminate some of the taxes and court issues that families face after a loved one dies, but it's a good option for someone who plans to leave his or her assets to minor children and doesn't want to make them available until the children reach a specific age.
Letter of Intent
A letter of intent tells the executor of your estate or your beneficiaries any specific details that they need to know about distributing your assets and your funeral arrangements. Planning your funeral before your death eliminates a lot of stress that your family faces, and ensures that your wishes are taken into consideration when planning your service. Additionally, if you want to be cremated after your death, you need to locate a funeral home that offers cremation services and determine whether or not your state requires you to sign an Authorization of Cremation form before your death. If your state requires additional paperwork to provide cremation services, you should include a copy of the paperwork along with your letter of intent.
Power of Attorney
Your estate plan should name both a durable power of attorney and a healthcare power of attorney. Your durable power of attorney is authorized to handle any financial or legal decisions for you if you become disabled before your death, and a healthcare power of attorney handles any medical-related decisions for you if you are unable to make them yourself.
Estate planning is an on-going process. However, it's not something that you should avoid. Without an estate plan, it's up to the state to distribute your assets, designate guardians for minor children, and designate a power of attorney if needed. Don't leave these decisions up to the court. Take the time to create an estate plan.