The Big 5
The thought of planning for the worst can seem overwhelming. Breaking down the estate planning process into five manageable steps can help focus your efforts.
Establish a plan for health care. By setting up a health care power of attorney and living will, you provide a written guide for your loved ones and health care providers should a medical problem arise. Beyond simply creating these documents, it is important to communicate your plans to your loved ones so they are aware of your wishes in advance.
Select and notify an executor. Your executor will take on the role of distributing your assets according to your will. This role can be time-consuming and complex, so it is a good idea to speak with your executor prior to making this appointment to make sure he or she understands the duties involved.
Make sure financial affairs are in order. Although privacy is often a concern when it comes to financial affairs, some level of transparency may be necessary to protect financial assets and to set beneficiary expectations. A financial power of attorney allows you to choose a trusted, capable individual to handle your financial affairs in the event of your incapacity. You may wish to discuss your current financial situation as well as your financial goals with your P.O.A. and future beneficiaries to alleviate confusion upon your incapacity or death.
Execute a will and communicate its contents with interested parties. Your will spells out how your assets will be distributed upon your death, whether that be to family, friends, or charities. Communicating your wishes to expected beneficiaries in advance can help minimize conflict after you pass away.
Compile all important financial, legal, and medical documents. Make sure that your will and other estate planning documents, as well as information relating to your financial assets, life insurance policies, real estate, vehicles, and the like are easily accessible and notify necessary individuals where these documents can be found.
For further discussion and information, take a look at this recent article from Kiplinger.