Including the right documents in your estate plan is crucial to the plan providing you and the people you love with adequate protection. There are many different documents that people can add to their estate plans depending on their financial circumstances and family situations.
Still, most testators considering their legacy and their needs as they age will likely require most of the four documents explained below.
- A last will and testament
Your will is likely the cornerstone of your entire estate plan. This document allows you to designate a guardian for your children and to allocate specific property for people and charitable causes that matter to you. Making sure that your will complies with state law and that it accurately reflects both your personal resources and your family situation will benefit you and the people you want to provide assets for after you die.
- A trust
There are many circumstances in which a trust is useful. Those who own businesses or real estate may want to use a trust to simplify the transfer process, reduce challenges against their wishes and minimize estate tax risks. Others who worry about collection activity or qualifying for Medicaid as they age may also benefit from adding a trust to their estate plans.
- An advance healthcare directive
Also known as a living will, an advance healthcare directive explains your medical wishes in depth. From the doctor or hospital that you would prefer to receive care from in an emergency to your wishes regarding anatomical gifts, life support and pain management, your advanced directive will give you an opportunity to leave clear instructions for the people who may make medical choices on your behalf.
- Powers of attorney
Knowing your medical wishes won’t benefit the people you care about if they don’t also have the authority to act on those preferences. Powers of attorney can transfer financial authority to someone so that they can pay your bills or run your business. A medical power of attorney allows you to name a specific person to communicate with healthcare providers regarding the treatment that you undergo.
Including the right documents in your estate plan will make it easier for you to retain control over your legacy and connect with appropriate support after a medical emergency.