Thinking about the future is difficult for anyone, no matter their age or phase in life. It can be difficult to picture where one will be in a year, five years, 10 years and even 25 years from now. Nonetheless, it is important to consider what one’s goals are and what one would like to protect now and into the future with regards to wealth and property. While drafting an estate plan might appear to be a daunting task, the reality is that residents in Illinois, Florida and other states across the nation can greatly benefit by having an estate plan in place.
Ducks in a row
As the saying goes, it is important to have your ducks in a row. However, even if one is still working for their dream career, home and family, it is never too early to draft an estate plan. Because it can be difficult to know where to start, one should consider the following six essential estate planning documents. These are considered essential when it comes to an estate plan; however, they are by no means required or the only documents to include in one’s plan.
Essential estate planning documents
While a will serves as an essential estate planning document, it is often not the most critical or important. The purpose of this document is to indicate the executor or personal representative, dictate how probated assets will be distributed, simplify the administration of the estate by memorializing one’s wishes in the document and provide names of the guardian for minor children, if applicable.
A second essential document is a durable power of attorney. This document indicates the person one chooses to make financial and legal decisions if he or she ever becomes incapacitated. Next, one should consider a revocable trust, as it can help one avoid probate while ensuring the listed heirs get the listed asset. Fourth, one should have a beneficiary designation, as it is this document and not the will that distributes retirement accounts and life insurance death benefits to the designated beneficiary.
Fifth, one should have a healthcare directive or medical power of attorney. As the name suggests, this document indicates the individual allowed to make healthcare decisions on one’s behalf if he or she is unable to do so. Finally, it is important to include a guidance letter to one’s family. This document may outline one’s wishes when it comes to their funeral, but it could also provide clear guidance on the distribution of assets, helping one’s family avoid future conflicts.
Much like life continually changes, so too can an estate plan. Thus, one should not only be prepared to navigate the initial process of drafting an estate plan, but they should also consider when and why they would need to revisit it. Keeping an estate plan up-to-date is essential, as it ensures one’s wished are met at the end of their life.