Estate Planning: The Essentials

Estate planning is about protecting your assets, protecting yourself, and protecting your family. No matter what stage of life you are in, estate planning is something you should do now.

A comprehensive plan can ensure that your preferences about religion, medical care, what types of treatments you’ll receive, and where you want to be cared for are respected if you are not able to speak for yourself. An estate plan can ease the burden for the people who must continue on without your input, and it is necessary to establish legal guardians of your minor children.

Planning for Care

Having a plan in place to carry out your wishes to care for your minor children is essential.

The first and most important step is to set up the essential documents that will ensure your plan can be legally enforced. The essential documents are: (1) a will that appoints a guardian for minor children; (2) a health care proxy that specifies your wishes and appoints someone to make healthcare decisions on your behalf, and (3) a durable power of attorney that gives someone you elect the legal right to handle your finances and pay for your care.

Creating A Will

A will is the most common estate planning instrument. It is the only legal way to appoint a guardian for your minor children. It’s always advisable to see an attorney about creating a will, particularly if you are using it to name a guardian for your children.

A will can also be used for other estate planning purposes and offers a great deal of control over how your assets will be distributed. The drawback of using a will for passing on assets is that wills are subject to probate, which can be a lengthy, expensive, and public process.

Determining Your Health Care Proxy

A health care proxy is a document that appoints someone to make health care decisions on your behalf. Together, these are sometimes called an “advance directive”.

Your doctor’s office is a great place to start as they will be most familiar with your health situation, and they have a general understanding of requirements in your state.

Creating A Durable Power of Attorney

The third essential document is a durable power of attorney. Once you have appointed a healthcare proxy and specified your preferences for care and/or created a living will, you will need a durable power of attorney for finances. The durable power of attorney will need to be drafted by a lawyer.

This document empowers someone to make financial decisions on your behalf, including paying your bills and paying for your care.

The Bottom Line

The foundation of your estate plan starts with having basic legal instruments in place and updating them as needed. You’ve worked hard to build a life for yourself and the people you share it with. By taking the time to address your plan now, and it’s simple to make sure your wishes are carried out.