When you start the process of estate planning, you may only make a plan for who gets your assets. But there is much more to the process than leaving your inheritance behind. You also want to prepare for what happens to you as you get older.
An estate plan should ensure that you don’t have to worry about accidents or illnesses leaving you unable to communicate. By filling out essential planning documents, you can leave behind instructions and designate people to make decisions. Here are a few important pieces of a well-rounded estate plan.
Wills and trusts
If you don’t write down instructions for who gets your assets, Pennsylvania law determines who receives your property after you pass away. By creating a will, you make sure the inheritance you leave behind goes to the people you want to have it. A will can also name guardians for your children.
A trust works like a will but can avoid probate court. You may also use a trust for its tax advantages or to protect your property from creditors.
If you get sick or have an accident and can’t communicate, a living will leaves behind instructions for your medical wishes. You don’t have to leave your family to make tough decisions for you.
Medical power of attorney
You can also choose someone you trust to make decisions for you by appointing an agent with a medical power of attorney. Your health care agent makes medical decisions for you when you can’t. This prevents your family from fighting about what care you should get.
Retirement account and life insurance beneficiary designation
You also need to make sure that you have a beneficiary for accounts that don’t go through a will or trust. Life insurance policies and retirement accounts like a 401(k) pay to your beneficiary directly. You will need to make sure you have your preferred person listed on your account documents.
A successful estate plan has multiple parts
These are some of the essential documents of an estate plan. But if you have more complicated assets or different needs, you may need more advanced tools.
As you prepare for your retirement and elder years, you may need more than a will for a successful estate plan.