Building an estate plan requires a clearly marked paper trail so that your wishes can be followed. Organizing everything beforehand ensures that these end-of-life allocations are doled out in a timely and fair manner. Here’s what you’ll need.
Last Will and Testament
Wills are the most well-known of these documents, providing an official road map for where your belongings will go. Beyond describing who will receive your assets, the last will and testament also designates a manager to settle your estate and a legal guardian for any minor children. Otherwise, a court will make these appointments.
Power of Attorney
Unfortunately, our deaths are sometimes preceded by lengthy illnesses. A durable power of attorney ensures that your estate is cared for, even if you are incapacitated late in life. Your designee will make sure bills are paid, manage investments and attend to other daily responsibilities so that these things don’t become an issue in death. You can set up an immediate power of attorney, if you are have pending surgery or are facing worsening health issues. A so-called “springing” power of attorney doesn’t become active until you are unable to handle your own affairs — but it isn’t available in all states.
Letter of Instruction
This is not legally required, or in any way binding, but it might be a good idea. A letter of instruction provides larger context for your wishes, while also directing the executor and your remaining family to important paperwork and other belongings. For instance, you might outline where your safe-deposit box is located, along with the key and a list of all contents. Some choose to discuss preferences for funeral and burial, and the names of anyone else who should be notified. Feel free to prepare this letter yourself, while an attorney should handle other necessary estate-planning documents.
Why It’s Important
Legal documents provide a platform for your decisions to be heard. You won’t be around to protect your belongings or justify your personal choices. This paperwork becomes your voice, while easing the responsibilities — and perhaps even the pain — for those left behind. Complex determinations about distribution of possessions and final issues with your finances will be fixed and approved, allowing everyone else to move on with grieving.