Creating an estate plan is one of the most important things you can do to provide for your family’s financial future. However, the thought of making one can seem like an overwhelming task.
But once you understand the key components of what to include, you can break the task into manageable parts.
What is an estate plan?
An estate plan is a set of documents outlining your final wishes, the distribution of your assets upon your death and a care plan in the event you become incapacitated. While estate plans may vary based on individual needs, here are some items that should be included:
- A will is the most basic of estate planning documents. It states who will inherit your assets and names guardians of any minor children.
- Power(s) of attorney allows you to appoint someone to handle your affairs if you become incapacitated. You may assign one person to handle your financial and legal matters and another to make healthcare decisions on your behalf.
- Advance directives outline your wishes for end-of-life medical care, such as “Do Not Incubate” or “Do Not Resuscitate” orders.
- Trusts are legal entities that hold your assets for the benefit of chosen beneficiaries. There are several types of trusts, such as revocable, irrevocable and testamentary.
- A Letter of Intent is a non-legal document that outlines your final wishes, such as funeral arrangements.
Creating an estate plan may seem overwhelming, but knowing what should be included gives you a place to start. However, many documents in your estate plan are legally binding. Therefore, it’s imperative to work with someone who can help ensure your family is provided for and your final wishes are carried out.