A common misconception is that estate planning is only for the wealthy. Estate planning is simply the process of planning the transfer of your personal assets to your chosen beneficiaries. It is important to communicate how you would like your assets distributed upon your death; and it is important to plan ahead regardless of the size of your estate. If you don’t plan your estate, someone else will make the decisions.
Basic estate planning typically involves creating a will, revocable living trust and powers of attorney. You may want to work with a qualified estate planning attorney to draft these documents.
At a minimum, you should have a will to name your beneficiaries, how assets are to be distributed and who will be the guardian to your children. A letter of instruction, while not binding, is also helpful in expressing your wishes such as funeral arrangements and in listing the names and contact data for your attorney, financial advisor and accountant. You should also designate a durable power of attorney (who is empowered to make financial and legal decisions on your behalf) and a health care power of attorney (who is empowered to make decisions regarding your life and health).
It is often wise to include a living will (which expresses your desire to receive or discontinue escalating levels of health care intervention); an authorization to release health care information; and do-not-resuscitate (DNR) orders, if that is your choice. A revocable living trust is often advisable since it provides guidance and instruction not only in the event of your death, but in the event you become incapacitated.
Taking proactive financial planning steps, such as planning your estate, can help you feel more empowered and in control.