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Four Important Estate Planning Documents Everyone Needs

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Estate planning allows you, not the courts, to make important decisions about your assets in the event you are incapacitated or deceased. Take a look at this lesson to learn about four documents that are essential to any estate plan.

Planning Your Estate

Estate planning allows you, not the courts, to make important decisions about your assets in the event you are incapacitated or deceased. Estate plans can be complicated, and it is usually best to seek the services of an attorney who specializes in estate planning when you’re ready to draw up a will, living will, trust and powers of attorney.

When major changes occur in your life, like marriage, divorce, the birth of children or grandchildren, retirement or the death of a spouse, it is important to review and revise your estate plan as appropriate.

To ensure your wishes are properly fulfilled, a comprehensive estate plan should include:

 

  • A will, which allows you to select your heirs; plan for distribution of your assets; designate charitable gifts; appoint a guardian for minor children; and even establish a trust for your spouse or children.
  • A living will, which complements the medical durable power of attorney by stating your specific wishes to refuse treatments that artificially prolong life. A living will, also known as a medical care directive, must be signed and witnessed to be valid.
  • A trust, which is a legal document containing instructions for managing your assets during your lifetime, if you become physically or mentally impaired or upon your death. 
  • Powers of Attorney, which may be financial or medical. The durable financial power of attorney is a simple, inexpensive and reliable way to arrange for someone to handle your finances if you become unable to do so. The medical durable power of attorney allows you to name a health care agent to make medical care decisions consistent with your wishes if you are not able to express these wishes directly to your doctor or family.

 

Most married couples own property or accounts jointly, which allows everything to pass to the surviving spouse. Jointly-held assets are not controlled by wills or trusts and are not subject to probate proceedings.

Beneficiary designations let you name the individual(s) you want to receive your assets in a particular account on your death. The most common examples include life insurance policies, beneficiary deeds, 401(k) plans and Individual Retirement Accounts.

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