Without an estate plan in place, your family may not know what to do with your assets in the case of your death. Likewise, they may not know what to do if you are unable to voice your wishes in case of a medical emergency.
Forbes describes several estate planning documents that everyone should consider.
A will or trust
Wills are the most common estate planning document. Without a will, the state decides who your heirs are, what they receive and what happens to any minor children after you die. Wills ensure that you decide who raises your children and how you distribute your possessions to your heirs.
A trust, on the other hand, is a legal arrangement with more flexibility and options for managing your assets. You choose a trustee or person who manages the trust. He or she will control the assets in the trust and hold them for your beneficiaries.
Advanced medical directives
You may know your medical preferences, but if something were to happen to you, would your family know? In an advanced medical directive, you outline your wishes for medical care. Advanced medical directives include:
- Living wills
- A durable power of attorney
In a living will, you state what lifesaving measures you approve of and which you do not approve of. For instance, if you are in a terminal situation, the living will provide directions on whether to administer CPR, whether to provide artificial feeding or whether to extend life support. DNRs or do-not-resuscitate orders, stop healthcare workers from performing CPR if you have a heart attack or if you stop breathing.
If you have a durable power of attorney for healthcare, you permit another person to make medical decisions for you.