Many people find the term “estate plan” somewhat confusing. A very large percentage of the population do not really understand what an estate plan is or what types of documents are included in an estate plan, or may believe that estate planning is only for the wealthy.
The truth is that nearly everyone has some type of estate, even if that only consists of a small bank account and an automobile. Whatever you leave behind when you die is considered to be your estate; this also includes your debts. When you have an estate plan, what you really have is a plan to handle all of your affairs once you are gone.
In addition to tying up all of the loose ends once you are gone, an estate plan can also provide you and your family with protection in the event that you should become incapacitated. It is important that you have legal documents that appoint someone to act on your behalf concerning your financial and legal affairs. You will also want to appoint a health care agent to make medical decisions for you if you are unable to make those decisions yourself.
The basics of an estate plan will usually include only a few documents; these documents are a will, a Living Trust, and a Durable Power of Attorney. Additionally your estate plan can also include Advanced Medical Directives, which consists of a Medical Power of Attorney and a Living Will.
If you have minor children, you will use your will to name someone to act as the guardian for your children if something should happen to you while they are still young. The Living Trust will hold your property safely for those you would like to leave it to when you are gone. You will also appoint a trustee to manage those assets.
Of course your Durable Power of Attorney will allow someone to manage your legal and financial affairs if you cannot do so for some reason, and your Advanced Medical Directives can help you and your family prepare for any medical emergencies that might occur in the future, plus you can include your wishes for end of life medical treatment in your Living Will.
Everyone should have a basic estate plan, no matter the value of his or her estate.