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What are the four must-have documents in an estate plan?

On Behalf of | Jun 10, 2022 | Estate Planning

Individuals often feel overwhelmed by the prospect of crafting a comprehensive estate plan. While this set of documents can often become a detailed collection of information, there are certain factors that are more crucial to the success of the plan.

While every individual’s financial situation is unique, there are common documents in an estate plan that people must address, including:

  • A will: The will is likely the first thing you think about when you consider an estate plan. Individuals put a will in place to create clarity around the distribution of assets to heirs. From homes and vacation property to vehicles and sentimental property, the will can be as general or as detailed as you’d like.
  • Trusts: As the will focuses mainly on physical or digital assets, the trust generally covers financial elements of the estate. While the trust can aid in the holding and transfer of assets, many people use them to fund a foundation, scholarship or secure the financial stability of a minor child.
  • Financial power of attorney: In addition to end-of-life decisions, you can craft the estate plan to position someone who can make financial decisions for you should you become incapacitated. A mental or physical disability might prevent you from making decisions such as real estate transactions, managing finances or even filing a tax return. An individual with powers of attorney can make these decisions in your stead.
  • Medical power of attorney: In addition to the financial responsibilities inherent in the durable power of attorney, the healthcare power of attorney focuses on important medical decisions. Appointing another individual to make medical decisions for you should you become incapacitated can prevent emotional arguments among loved ones. Like a will, this document can be either broadly or narrowly defined.

Based on personal circumstances, some individuals might also include information regarding guardianships, conservatorships or links to the family business’s succession plan in the overall estate plan. It is important to take the time to thoroughly examine your unique financial complexities as well as your desires and goals for the future when developing a comprehensive estate plan.