Today marks the beginning of National Estate Planning Awareness Week, which was created to help the public better understand this important area of financial wellness.

Estate planning is a little different for everyone. While you are alive, the estate planning process allows you to manage and preserve your assets while you are alive. At death, your estate plan allows you to conserve and control their distribution after your death according to your goals and objectives.

There are five documents that you should consider regardless of your age, health, and wealth:

Will

The crux of any estate plan, a will distributes your property as you wish after death.

Without a will, disbursements are made according to state law, which might not align with your priorities. In addition, a will names an executor to manage and settle your estate as well as a legal guardian for any dependents.

Since this is a legal document, it is crucial that your will be well written and articulated so that it is properly executed under your state’s laws.

Living Trust

A living trust (also known as a revocable or inter vivos trust) creates a separate legal entity to own property.

The primary benefit of a living trust is that your assets avoid probate, which can be costly and time consuming. Until the probate process is completed, your assets can’t be distributed to your surviving heirs.

In addition, probate can interfere with the management of a closely held business or stock portfolio. If you are concerned about probate documents such as your will and statements of assets/property become public record, having a trust in place generally prevents public knowledge of your estate.

Durable Power of Attorney

A durable power of attorney (DPOA) authorizes someone to act on your behalf should you become physically or mentally incompetent to handle financial matters. The person you designate in the DPOA can pay bills, file taxes, direct investments, etc. on your behalf.

Advanced Medical Directives

Advanced medical directives allows you to specify the medical treatments you desire in the event you can’t express your wishes and appoint someone to make decisions for you.

Without this document, medical care providers must prolong your life using artificial means, if necessary. The three types of advanced medical directives are a living will, a durable power of attorney for health care, and a Do Not Resuscitate order.

Letter of Instruction

A letter of instruction is a non-legal document that may accompany your will to express personal thoughts and directions. Unlike a will, the letter of instruction remains private and its directions are not binding.

If you’d like to read more on estate planning, here are some additional posts from my colleagues at Plancorp.

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