When preparing for the future, it is important to have a well-organized estate plan in place. The courts will follow this plan and act according to your wishes after your passing.
Consider some of the key elements to include in your estate plan.
1. Will
A will is a fundamental part of your estate plan. Surprisingly, only two out of three adults have one. This important document outlines how you want your assets distributed among your beneficiaries. Be sure to list all your valuable possessions, such as property, savings, investments and personal items, along with who should receive them.
2. Beneficiary designations
Certain accounts, such as retirement plans and life insurance policies, require you to designate beneficiaries. Ensure these designations stay up-to-date to guarantee that these assets go to the intended recipients.
3. Power of attorney
A power of attorney document grants someone you trust the authority to make financial and legal decisions on your behalf if you become unable to do so. This ensures the management of your affairs according to your wishes.
4. Advance medical directives
Advance medical directives encompass a living will and a medical durable power of attorney. A living will outlines your preferences for medical treatment if you are unable to communicate your wishes, while a medical durable power of attorney designates someone to make medical decisions on your behalf.
5. Inventory of assets and debts
Compiling an inventory detailing assets, ranging from financial accounts to real estate holdings, and liabilities, including mortgages and loans, is an invaluable resource for executors and beneficiaries. This comprehensive record improves the process of asset identification and financial liability management.
Life is dynamic, and your estate plan should reflect that. Review and update it periodically, especially after significant life events.