Though death isn’t something we always like to think about, it’s a part of everyone’s future. And if you want to save your family stress and questions when the times comes, you need an estate plan.
While estate planning might sound like something only a land baron needs, everyone has an estate. In legal terms, “estate” just means “the things you own.” Even still, you may not think you have enough of an estate to bother with planning—this is a common misconception.
If you have kids, a partner, spouse, or property, you need to make an estate plan.
However, fear not, it’s not complicated. All you need is four documents to get started:
- Will: This states who gets what when you die, names guardians, and specifies a trusted person to be in charge.
- Living will: This is also called an advance healthcare directive. It states your end of life wishes for medical care that you do—or don't—want.
- Health Care Proxy: This document names someone to make medical decisions for you if you can’t speak for yourself.
- Power of Attorney: This document names someone to make financial decisions for you if you can’t or don’t wish to.
A will (short for “last will and testament”) is a legally binding document that says what happens to your money and property. Your will typically addresses the following issues:
- Executor: appoints somebody to ensure the instructions you left are followed appropriately.
- Beneficiaries: lists who you want to receive your assets.
- Guardians: designates care for your children or pets.
- Investments/debt: lists how to distribute investments or pay for debts.
This document goes by a few different names: advance healthcare directive, personal directive, advance directive, or advance decision. No matter what you call it, it defines your wishes for end-of-life medical care.
In most cases, a living will includes:
- Your preference on sustaining life support if you are legally brain-dead, in an irreversible coma, or dying from a terminal illness
- Preferences on medical procedures or treatments you do (or do not) want
- Your pain management wishes
Health Care Proxy
Sometimes called a Power of Attorney for Healthcare, a Health Care Proxy document designates one or more people to have the authority to make medical decisions for you should you not be able to make them for yourself.
Here are some scenarios where an HCP is vitally important:
- You have had an accident and are unconscious
- You are suffering from a severe mental illness
- You are suffering from dementia or Alzheimer’s disease
- Family is likely to argue over who should make decisions for you
Power of Attorney for Finances
You can choose an individual to handle your finances in the event you become incapacitated or lose your decision-making abilities due to things like dementia or mental illness. This document can go into effect upon signing, or “spring” into action if certain needs arise in the future. It’s important to make sure you name someone you trust to manage your finances if something happens to you. A POA is no longer in effect after you die. After death, your finances will be handled by whoever you name as the executor of your will and estate.
What about my online accounts and digital assets?
Digital assets are property, too, and you should treat them as such. So much of what we do today is online: banking, investment accounts, even our photos and Facebook page might be considered assets you want to protect and share. Plus, you'll make it easy for your executor (or family members) to access your data after you're gone.