Most people know that an estate plan gives loved ones a plan to follow for distributing assets after a family member passes away. While that is one important part, there are others that you should know about. These outline your plans before you pass away if you become incapacitated.
An estate plan can have several components. You should learn a bit about each to determine which ones are appropriate for your needs.
Health care instructions
Your loved ones might be curious about what you want to accept or decline for medical care in your final days. If you aren’t able to relay those wishes yourself, you need to have a living will in place. This is a set of written instructions to your medical care team so they know what you want. You can also name a health care proxy who can speak up for you when there are decision to make that aren’t covered in the living will.
Financial powers
When you are incapacitated, your bills still need to be paid. You can name a financial power of attorney to handle this. Be sure that this is someone you trust because they will have access to everything from your bank accounts to your home and investment portfolios.
Asset designations
Your loved ones shouldn’t have to decide who gets what. Instead, you can designate beneficiaries. Another option is to establish trusts that will pass these assets along when you die in accordance with special provisions, if any, you place on them. You also need to check the payable on death designations on financial accounts. This includes bank, investment and retirement accounts. Even your life insurance policy has a beneficiary designation.
Special instruction
The letter of intent provides special instructions that are useful in the period prior to your estate being filed with the court. Remember that this isn’t a legal document. It is only an outline of some of your wishes, such as what you want at your funeral. You can also include a list of places with which you have accounts, including ones online. This is a good place to leave usernames and passwords as long as you have the document secured.
It is imperative that you ensure your estate plan always reflects your current wishes. To do this, you can review it periodically, such as after a major life change or once every one to two years.