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3 most important parts of an estate plan

On Behalf of | Jun 25, 2024 | Estate Planning

The future can often seem intimidating. However, estate plans ensure that other people care for an individual’s wishes when this person can no longer make decisions.

Each part of this plan plays a huge role in protecting an individual and their assets.

1. Will or testament

A will or testament is a legal document that outlines how others will give away a person’s assets after their death. It specifies who will receive their property, money and other possessions.

The will also names an executor, the person responsible for carrying out the instructions in the will. Without a will, the state decides how to distribute the assets, which may not align with the dead person’s wishes. Having a will ensures that assets go to the right people and reduces potential conflicts among family members.

2. Power of attorney

A power of attorney, or POA, is an estate planning document that gives someone the authority to act on another person’s behalf in financial and legal matters. This person, called the agent, can handle tasks such as paying bills, managing investments and making financial decisions.

The POA is especially key if the person becomes incapacitated and unable to manage their affairs. Choosing a trustworthy and responsible agent is important because they will have significant control over the person’s finances.

3. Healthcare directive or living will

A healthcare directive or living will specifies a person’s wishes regarding medical treatment if they cannot communicate those decisions themselves. It includes choices for resuscitation and other types of medical help. This document guides doctors and family members in making decisions that align with the person’s values. Having a healthcare directive can relieve family members from the burden of making tough choices during emotionally challenging times.

Stress about the years to come is a serious part of life, no matter what a person’s age is. Estate planning can provide peace of mind and prevent worry.