Estate Planning: Overview and the minimums everyone should have

I have found that a lot of people procrastinate when it comes to estate planning and getting their affairs in order in the event of the inevitable: death. It is not easy to think about which is probably why most people ignore it or put it off saying "I will take care of it later." I am here to say that you need to take care of this as soon as possible as you never know what tomorrow will bring. You have to make sure your loved ones are taken care of!

Documents are the first step. Everyone should have, at a minimum, the following:

  • Will: You have to decide and put in writing who gets what from your possessions when you pass away. This is also where you specify a caretaker for your children in the case of absence or simultaneous death of the other parent. Don't let the state decide who gets your money and stuff!
  • Living Will: This document gives the power to allow someone to pull the plug if you are in a coma or vegetative state where doctors think you will never wake up. Choose this person wisely! Typically it is a spouse or close family member.
  • Financial Power of Attorney: This gives someone the power to act on your behalf for your finances. This is useful if you become incapacitated or unable to take care of them yourself. This is typically given to a parent or spouse.
  • Medical Power of Attorney: This gives someone the power to act on your behalf for medical decisions. If you are unconscious and doctors need permission to do a surgery or other procedure someone can sign on your behalf to get you healthy again! This is also typically given to a parent or spouse.
  • Life Insurance: If you have children or others who depend on you financially then you most certainly need life insurance. You need enough to replace your income until they are able to take care of themselves. It is also good to have enough (in addition) to pay off your mortgage if you have one. I will discuss this further in it's own post here.
Above are the minimum that everyone needs. It is worth spending the money to have an estate attorney draw them up so you have all of your bases covered. A lot of firms offer a package deal for all of these documents at a reasonable rate. There is no chance for correction on these documents after you are gone!

I must also say that keeping them up to date is just as important as having them! If you get married, divorced, a large inheritance, buy a house, or any other major event you need to revisit these and update them as needed. You want to be sure that your intentions for your estate are in writing and legal. A lot of people will all of their assets to a trust and then modify the trust document as needed. This is easier in some regard and I suggest talking to an attorney for more details on trusts. They are complicated yet powerful legal tools for people with a lot of assets.

Estate planning is not as daunting and bad it most people think it is. It is not pleasant to think about but it is one of those chores we need to get out of the way so we can move on with our lives. Be sure to keep them in a safe or safe deposit box and have your estate attorney have copies on file too. Make sure your loved ones are taken care of!