ELEMENTS OF A WELL-ROUNDED ESTATE PLAN

  1. Your will. A will outlines how your assets will be distributed, who will be the executor of your estate, who the guardian of your children will be, and who will take care of any pets. Without a will, the government gets to decide how everything is split and who takes guardianship of children and pets, which can vary by state.
  2. Beneficiaries. Not all assets pass to your surviving friends and family through your will. According to Consumer Reports, 401(k), individual retirement accounts, and life insurance policies pass to beneficiaries that are designated within those specific documents.
  3. A durable power of attorney (DPA). A DPA can serve as your financial proxy if you can no longer manage your own affairs.
  4. An advance medical directive. This is the combination of a DPA for healthcare, a living will, and HIPPA release forms. An advance health care directive describes what medical procedures you do or don’t want and who has the right to make medical decisions for you if you can no longer make them yourself.
  5. Life insurance. If you have family that depends on your paycheck, life insurance might be a good option to include in your estate plan. Life insurance can help take care of your family and loved ones financially after you die. Not sure how much coverage you need? You can use Bankrate’s Life Insurance Calculator to figure out what size plan will work best for you.
  6. Trusts. Living trusts allow you to hold assets for beneficiaries while dictating how and when they receive those assets. Different types of trusts can help your family avoid processes like probate or estate taxes, so do your research as to which type will work best for you.

REF: Bankrate.com, leaving a legacy: Why everyone needs an estate plan

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