A comprehensive estate plan addresses who gets your stuff, who can make decisions on your behalf, who will take care of your kiddos, and what medical treatment you want. This typically includes a will, medical power of attorney, financial power of attorney, living will and a guardian for your kiddos. In some circumstances, you may also want a trust.
A will, sometimes called the Last Will and Testament, is a legal document that lays out how you want your assets distributed. It may also name guardians for your minor children and create a trust for their care.
A living will, or advance directive, tells your doctors whether you want them to administer life-sustaining procedures or use artificial hydration and nutrition. This only comes into play if two physicians determine that you have a terminal condition or are in a permanent vegetative state.
Financial, or General, Power of Attorney
The financial power of attorney document names someone to control your finances on your behalf. Your agent will have full access to your bank accounts and bills.
Medical Power of Attorney
The medical power of attorney names someone to act on your behalf with regards to your medical care. They will have full access to your medical care professionals. Your doctors will be able to discuss your condition with your agent in the same way they would talk to you.
Trusts are commonly used to avoid probate. Assets you put into the trust are not included in your estate and will pass to the trust beneficiaries without going through probate. This reduces the value of your estate, which may be desirable if you are close to the estate tax exemption. It also avoids the probate process which can be time consuming and expensive. There are many types of trusts that can achieve different goals.
It is a good idea to keep some more information with your estate planning documents. You should include a list of all your online accounts and passwords, people you would like to be contacted in case of emergency or death, people who may have information your family will need (attorney, doctors, CPA, etc.). You can also create a list of “stuff” you want to give to specific people. Say you have a painting that your niece has always loved and a desk your son wants. You can write this down, sign and date the document and it’s good to go. If you change your mind, destroy the paper and re-do it. No need for an attorney or a notary.