Whether you have millions of dollars in assets or a modest estate that includes the family home, some common estate planning tools are relevant in most cases. Some of the estate planning tools you might want to think about include wills, powers of attorney, trusts, living wills, Health Insurance Portability and Accountability Act releases and life insurance.
Wills are legal documents that record your wishes for end-of-life care, funeral and other burial arrangements and the disbursement of your assets. Trusts might also be used to disburse assets to heirs, especially if you want to exercise a bit more long-term control over decisions and processes.
Powers of attorney and health care proxies let you name someone who you trust to handle certain aspects of your life if you are suddenly unable to do so. You might name a POA to handle your banking and financial accounts or appoint someone to make health care decisions if you are incapacitated. It's important to pick someone you trust for these roles, as you might be handing over a great deal of responsibility. If you do hand over health care decision-making, then a HIPAA release might be necessary. Such a release lets doctors and others discuss your health care with the people you identify on the release.
Life insurance is a good way to cover death expenses without burdening your family or to provide for heirs after your death. You can purchase life insurance in varying amounts depending on your age, health and the amount you're willing to pay for a premium. Life insurance lets you identify beneficiaries for the funds; beneficiaries could be your spouse, your children or others.
Because everyone has different needs, each person will use a different combination of estate planning tools. Working with a professional helps you understand which tools are right for you.
Source: Bankrate, "9 key estate-planning tools," accessed Oct. 23, 2015