Younger people often think that things like creating a will or setting up a trust are solely for the wealthy or elderly. It is true that estate planning becomes more critical later in life, and that wealthy individuals often make use of estate planning resources, but the reality is that there are elements of estate planning that everyone should familiarize themselves with.
There are a few basic documents everyone should have created. They are often inexpensive, are relatively simple to understand and will snuff out potential questions should you suddenly pass away or become incapacitated.
The big three
Three of the most important documents an individual can have to their name include a simple will, power of attorney and a health care directive. These documents provide a firm groundwork to ensure that your wishes are properly carried out as you wish.
These three legal documents accomplish the following:
Many people do not realize that there are multiple forms of wills. Simple wills name who you want your money and belongings to go to when you pass away, and who oversees making sure that happens. A simple will can also name guardians of your children.
Simple wills are specifically for people with smaller estates and under 50 years of age. They are often quick and inexpensive to draft with the help of a professional.
Power of attorney
This tool allows you to designate someone, called your “agent”, to legally act on your behalf in financial matters if you are incapacitated. Even if you do not make a lot of money, costs are always a consideration when someone is incapacitated or getting late in life. Having someone you trust manage your money is a real help.
Setting up a power of attorney ahead of time also saves your loved ones from having to petition a court to appoint a guardian of your property – an expensive and time-consuming process.
Health care directive
There are several legal documents that ensure your medical wishes are carried out if you are incapacitated, but one of the simplest is a health care directive. A health care directive is a document designed to guide the choices doctors make.
This differs from a slightly more complex medical power of attorney, in which you appoint someone else to make your medical decisions for you.
Estate planning can be daunting to people who are not a custom to managing financial or legal matters. Remember that basic estate planning is often simply a matter of drafting documents. It can usually be settled within a few hours with the help of a professional and costs less than most people expect.
Do not leave anything to question if there is a sudden accident. Cover your legal bases, get your documents in order.