Estate planning is the process of managing and preserving your assets while you’re alive and conserving and controlling their distribution after your death. There are four key estate-planning documents that almost everyone should have, regardless of age, health, or wealth:
- A durable power of attorney authorizes someone to act on your behalf to handle your financial matters in the event you become physically or mentally unable to do so. The person you choose can do things like pay everyday expenses, watch over your investments and file taxes.
- An advance medical directive lets others know what medical treatment you want—or do not want—in the event you can’t express your wishes yourself. If you don’t have an advance medical directive, medical care providers must prolong your life using artificial means when such a situation arises, even if you do not want such procedures.
There are three types of advance medical directives:
- A living will allows you to decline certain types of medical care, even if you will die as a result of that choice. In most states, living wills take effect only under certain circumstances, such as terminal illness.
- A health care proxy allows you to appoint someone to make medical decisions for you in the event you’re unable to do so yourself.
- A “Do Not Resuscitate”order, or DNR, is your directive to medical personnel not to perform CPR if you go into cardiac arrest.
Some states do not allow all three types of medical directives, so make sure you understand what’s offered in your state.
- A will ensures your property is distributed to your heirs after your death according to your wishes. In your will, you can name an executor to manage and settle your estate, and legal guardian to care for your minor children. A will is a formal, legal document filed with the court that eventually becomes part of a public record in a process know as “probate.”
- A letter of instruction is an informal, non-legal document that generally accompanies your will and expresses the intentions of your will, or other things such as your personal thoughts, your burial wishes, or the location of other important documents. A letter of instruction can be the most helpful document you leave your family members. Unlike your will, it remains private. Life is unpredictable. So take steps now, while you can, to have the proper document in place to ensure your wishes are carried out.
IMPORTANT DISCLOSURES
The information included in this document is for general, informational purposes only. It does not contain any investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any investment advice. If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.
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