Estate planning can be a daunting task, given the somber circumstances surrounding it. However, you only need a few key legal documents to solidify your legacy and give yourself peace of mind. Familiarize yourself with the following legal documents and be ready to discuss them with a financial advisor as you ensure the future is taken care of.
What Documents Are Needed for Estate Planning?
1. Durable Power of Attorney
This legal document assigns someone to manage your financial and legal affairs if you’re no longer in the position to make decisions. This includes handling your assets, making financial transactions, and buying and selling property.
Spouses usually act as the designated agent, but family members, friends, or a trusted financial advisor can also perform this role. The designation remains effective until you die or revoke power from the chosen agent.
2. Health Care Power of Attorney
A health care power of attorney gives a chosen person authority to make decisions pertaining to your personal wellness if you’re incapacitated. This role is usually filled by your spouse or another family member who is in agreement with your wishes for medical care.
3. Last Will & Testament
Your will should be one of the main components of your estate plan. This document assigns the beneficiaries who will inherit your possessions, financial assets, and property after your death. Your will also names an executor who will be in charge of settling your remaining affairs.
4. Living Trust
Unlike a traditional will, this document designates a successor trustee to handle your estate and assets while you’re still alive. A living trust also helps your beneficiaries bypass probate court proceedings after your passing, saving a lot of time and money as a result.
5. Beneficiary Designation
The person named in this legal document inherits specific assets when you die. These assets can include your retirement account balance, a life insurance payout, or an annuity, so you should review these documents regularly if you have them. Take note, though, that a beneficiary designation is a simpler document and does not replace a last will and testament.
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