Estate planning is a task that most people don’t want to think about, but it is critical that everyone gets their plan set before their loved ones need to use any component. While you might think that your estate plan won’t go into effect before you pass away, this isn’t the case. Some areas of your estate plan are used if you become incapacitated.
If you don’t have a current estate plan, now is the ideal time to get one created. If you already have one in place but haven’t reviewed it lately, you can get it done now. Remember that it should be comprehensive.
Will and trusts
Your will and trusts establish the flow of where everything will go when you pass away. Assets that are included in the will won’t be placed in trusts and things in the trusts don’t need to be placed in the will. When you are going over your assets, you must also determine which ones have a payable on death designation. These are usually financial accounts like checking, investment and retirement accounts. You also won’t include life insurance policies in the trust or will unless you are using a life insurance trust.
Your advance directives include the things that doctors and others will need to do if you can’t make your own medical care decisions. The living will is your instruction manual that covers what specific treatments and procedures you are willing to undergo and which ones you absolutely refuse. For example, you might refuse to be placed on complete life support but are willing to have intravenous nutrition and hydration. Outlining this clearly can help doctors to plan for your care if you are incapacitated.
On top of the living will, you need to set up a health care powers of attorney designation. This person steps in to make decisions for you if the matter isn’t covered in the living will. They assert your rights when you aren’t able to do so. You can set a primary and an alternate so there is a better chance that someone can do these important duties.
Letter of final instruction
While the letter of final instruction isn’t an official estate planning tool, it is very helpful for your estate administrator and others. This letter should include information about the location of the will and other important financial points. You can discuss anything that isn’t included in other places in the will, but remember that this isn’t a legally binding document.