It’s not anyone’s list of favorite things to do, but preparing for the inevitable is, perhaps, one of the most important things you can do for yourself and your loved ones. To do it right, you need four essential documents prepared. It’s not as involved as you may think, and, for most people, they can be prepared inexpensively using an online legal service.
- You need a will: The bottom line is that, if you don’t have one, the state will become your executive. Who would want to do that to their loved ones?
- You need health directive: Why? Because you have a greater chance of becoming incapacitated, unable to make important health-related decisions, than you are to die. If it’s important to you, you could also prepare a living will which, essentially, instructs the hospital on your life support wishes.
- You need a power of attorney: For the same reason as you need a health directive, but it’s for all of your important financial decisions that need to be made when you are unable to make them.
- You need a living trust: If you own a lot of assets, or anticipate accumulating them over time, a living trust, as a complement to your will, ensures that they are passed on to your loved ones free of probate. Essentially, it expedited the disposition of your assets.
If you do well and accumulate a lot of assets, you may want to consider a bypass trust which can help to reduce the tax load on your heirs when they inherit all of your stuff.