The most important estate planning documents that everyone should have are:
- Durable Power of Attorney (for financial matters)
- Durable Power of Attorney (for health care)
- Living Will
Here’s a little description of what each one is:
Will – A document with written instructions directing how certain portions of your assets will be disposed at death.
Durable Power of Attorney (for financial matters) – A power of attorney is a written document that authorizes another person to act on your behalf. So if my husband is my power of attorney, he can make decisions on my behalf like invest my assets or pay for my expenses. However, if I become incapacitated, he no longer has that power. But with a durable power of attorney, he can still make decisions on my behalf even after incapacity.
Durable Power of Attorney (for health care/medical proxy) – A medical proxy is document authorizing another person to make health care decisions on your behalf when you are no longer able to understand or communicate your own desires regarding medical care.
Living Will – A living will is a document that allows you to state in advance what life-sustaining medical measures related to hydration, respiration, and nutrition should be taken by a health care provider if you are incapable of consenting to treatment.
This year, my husband and I focused on getting our life insurance in place. Now that that’s almost done, the next item on our financial to-do list is estate planning. We probably won’t tackle estate planning this year for two reasons:
- It can be pretty expensive – Getting your estate planning done can cost several thousand dollars. We spent a lot of money this year on the home remodel and we’re just starting to build up our emergency fund again so we’re not ready for another large expense yet.
- We’re hoping to have kids in the next few years and having kids is one of the triggers for updating your estate plan. It would be kind of a waste to pay a couple thousand dollars now to get it done and then have to redo it in a year or two once our first kid is born.