At first glance, the estate planning process may seem somewhat overwhelming, but it is less complicated than you think.
Here are four basic estate planning tools for you to consider along with a letter of instruction.
1. Last will and testament
In your will, you can provide instructions as to the distribution of your assets and personal belongings after your death. This is where you will also name a trusted personal representative to administer your estate.
2. Advance healthcare directive
No matter what your age, an advance healthcare directive is as important as your will. Should you become incapacitated because of an accident or illness, the person you name as your agent can make medical decisions on your behalf. You can also provide end-of-life instructions in this document.
3. Durable power of attorney (POA) for finances
Your POA for finances allows the person of your choosing to make financial decisions on your behalf. You can permit your agent to manage all your financial affairs or approve only limited legal powers, such as depositing checks and balancing your checkbook.
4. Revocable living trust
A revocable living trust can hold assets such as real property, investments and your bank accounts. You can name a trustee to manage these assets both during your lifetime and after your death. At that time, the assets contained in this trust will avoid having to go through the probate process.
Letter of instruction
While it is not a legal document, it is worthwhile to create a letter of instruction. For example. you can state your funeral and burial preferences, list your assets and debts, describe the location of important documents and provide key online information and passwords. The letter of instruction will be an important accompaniment to your estate planning tools. It will provide welcome information for those charged with winding down your affairs.