Do It Now: The Essentials of Estate Planning

Eight documents will help put your affairs in order so you don’t leave a mess to your loved ones when you die. Get this task done so you can get back to living.


Do you want to be remembered fondly by loved ones? Then tackle your estate-planning tasks. Your heirs will thank you for not leaving a mess for them to clean up.

Many of us want to get going but don’t know where to start. Here’s what you should know about eight documents that can help you get your affairs in order.

If that sounds like a lot of paperwork, don’t worry: You probably won’t need every document.

1. Last will and testament

Making a will gives you the power to decide what is in the best interest of your children and pets after you’re gone. It also can help you determine what will happen to possessions with financial and sentimental value. It typically names an executor — someone to be in charge of following your directions. Finally, you can include any funeral provisions and instructions.

In the absence of a will, a probate court is responsible for naming an executor (typically a spouse or grown child) to ensure your assets are appropriately disbursed. Probate proceedings are public record.

If you’re married, each spouse should have a separate will, AARP says.

Update your will as big changes occur — marriage, divorce, inheritance, purchase of real estate or the birth of a child. If you have moved to a new state, have your will reviewed by an attorney in the new state.

You can add to or change a will in either of two ways: Make a new will or add a supplement, called a “codicil.”

Get an attorney’s help if you have substantial assets or a legally complex personal or financial situation.

Use your will to name guardians for those under your care, including children and pets. Designate any assets you are leaving for their care.

Remember to keep private information — passwords, for example — out of your will, as it could become a public document.

2. Revocable living trust

A living trust is another tool for passing assets to heirs while avoiding potentially expensive and time-consuming probate. It’s “revocable” because you can change it as long as you’re mentally competent.

You name a trustee, perhaps a spouse, family member or attorney, to manage your property. Unlike a will, a trust can be used to distribute property now or after your death. If you have substantial property or wealth, a trust can provide tax savings.

ElderLawAnswers explains differences between trusts and wills. Creating a trust is not a do-it-yourself project. Get an attorney’s help.

3. Beneficiary designations

When you purchase life insurance or open a retirement plan or bank account, you’re asked to name a beneficiary who will inherit the proceeds. These designations are powerful, and they take precedence over instructions in a will.

Keep beneficiary designation papers with your estate-planning documents. Review and update them as your life changes, and you want to name new beneficiaries.

4. Durable power of attorney

Choose someone to act on your behalf, financially and legally, in the event that you can’t make decisions.

Don’t put off this chore. You must be legally competent to assign power of attorney. Older people, worried about relinquishing control, sometimes put off the task until they are no longer legally competent to do it.

If you have not designated someone as your power of attorney, your family’s hands are tied if you become incapacitated, something that can happen to young people as well as the elderly.

“For most people, the durable power of attorney is the most important estate-planning instrument available — even more useful than a will,” says an ElderLawAnswers article.

Some financial institutions won’t accept a general power of attorney document, so ask your banking and financial institutions if they have a separate power of attorney form that you must use.

ElderLawAnswers adds:

[I]f you do not have someone you trust to appoint, it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian.

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Comments

  • Kolleen Dohermann

    I bought a kit from Suze Orman, It has all of this stuff in there and does not require an attorney assuming you don’t have complicated holdings, etc. I sat down with my Mom and did everything in one day. My Mom passed away three months later and as executor everything went smooth. I do caution everyone out there that if you have a revocable trust (I do) you have to change the title of all accounts you want included in the trust. For instance, your house title, bank accounts, etc. have to be retitled. If not, they aren’t part of the trust. Doh! My Mom actually had paid an attorney to draw up the trust but never funded it. So you still have a bit of work but PLEASE care enough about your family to do the work. If you focus you’ll have it all wrapped up in one week. This is no time to procrastinate!

  • Jake

    When all is said and done, other than religious aspects which come from a church, marriage in the eyes of the government is simply a legal contract. I wonder if the same sort of arrangement (power of attorney, healthcare power of attorney, inheritance, etc.) could be made with contracts such that the various contracts performed the same thing as the marriage contract.

  • grandmaguest

    Don’t forget to include ID names and passwords for some of those accounts in #8 as well as to open any accounts you have on your computer…..or even for access to your computer. As well as your lawyer’s name, who would have copies of many of the documents (will, POA, trust, etc.) or any other person who may have them. It doesn’t do much good to have all these things if no one knows where to find them.

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