Although most people don't like to think about death, especially their own, everyone does eventually pass on. At the time of death, material possessions mean very little to an individual, however, these assets and belongings often mean a lot to loved ones left behind. Thinking this way about estate planning, often encourages an individual to start the estate planning process. The following are some basic components that every individual should consider including in an estate plan.
• A will - A will provides the foundation for an estate plan. A will can be used to leave loved ones specific assets and belongings. When executing a will, an individual should name an executor who will pay outstanding debts and help ensure named individuals receive willed items. Additionally, individuals with minor-age children can use a will to appoint a legal guardian.
• Advanced medical directives - A living will allows an individual to express his or her wishes with regard to end of life care and medical intervention decisions. Similar to the role of executor in a will, a durable power of attorney for health care provides a named individual with the authority to make medical decisions on one's behalf and as according to the terms of a living will.
• Durable power of attorney - In the event an individual is sick, injured or otherwise unable to make or tend to important financial decisions, a named durable power of attorney is given the authority to step in and act on an individual's behalf. This trustworthy individual has a fiduciary duty to pay bills and mange one's financial affairs.
• Living trust - Often used by individuals seeking to avoid probate, a living trust is frequently used to quickly and seamlessly transfer property.
Depending on an individual's specific situation and estate planning goals, additional documents may be beneficial. An estate planning professional can aid in ensuring an individual's estate plan is comprehensive and meets specific estate planning goals.
Source: American Institute of CPA's, "Key Estate Planning Documents You Need," 2013