As we get older, it is important to have certain plans in place in order to protect and secure the emotional and financial future of your loved ones. One of the most important processes to start is the Estate Planning process. Here is what you need to know about the four necessary documents that make up an estate plan and how they shape your life’s plan.
What is an Estate Plan?
A collection of documents that protects your assets and personal property (your “estate”) and explains how you want to pass them down. It documents your wishes and specifies exactly who will guard those wishes and act on them in your absence.
The Four Parts of the Estate Plan:
- The Last Will and Testament: Lays out who is going to inherit your possessions when you pass on. The will only controls and distributes assets that are in your name alone.
- Durable Power of Attorney: Appoints someone to handle your financial affairs if you can’t do it yourself or if you don’t want to do it yourself. It is very important this document is done properly and contains the right language.
- Health Care Proxy: Appoints one person to speak with doctors on your behalf if you are unable to communicate your wishes and decisions with your healthcare provider.
- Living Will: Personal statement that says, “If I am in an irreversible or incurable condition, I do not wish to have any medical treatment that will prolong my dying.” You don’t necessarily need to have a living will; it depends on one’s personal wishes.
As difficult as the topics of aging, illness, and death can be, knowing you have the necessary plans in place for yourself and your family can provide some peace of mind and structure for your later years.