Making sure your estate and family are taken care of once you're gone isn't always the easiest thing to think about, but you know it's the right thing to do. If you're like most people, you know the basics: write a will, appoint beneficiaries, and name someone as executor. But there are other things that can offer you and your family added protection. Here are three things you shouldn't skip when planning your estate.
Life Insurance Policy
Unless you're single with no kids, a life insurance policy offers more than just peace of mind; it can provide for your loved ones after you're gone. But if you have parents who may need to be provided for, you can get a policy with them as the beneficiary.
How much life insurance you need depends on a number of factors. Keep in mind your estate will have to pay off your debts after the fact, so you need enough to cover that. For example, if you have a $100,000 mortgage and a $10,000 car loan, you'll need $110,000 in your policy.
If you're looking to provide for your family, you'll need to think about your annual income and adjust for inflation. A life insurance representative or financial planner can guide you on this.
End-of-Life Documents
It's important to plan for events that could prevent you from being able to take care of yourself or make decisions. Therefore, consider implementing these four end-of-life documents:
- A durable power of attorney appoints someone—usually children—to manage your finances should you become disabled or incapacitated.
- A health care proxy allows someone to make health care decisions on your behalf if you can't.
- A living will provides instructions on care or treatment if you become terminally ill and are not expected to recover.
- Medical information releases give doctors permission to share your medical information with others, like your children, so they can make well-informed decisions on your behalf if needed.
Funeral Plans
If your burial wishes are included in the will, they may not be carried out for two reasons.
First, the deceased isn't considered "property" for estate purposes, and second, most family members don't even see the will until after the funeral has taken place.
Maybe you want your family to celebrate your life at a favorite park or a restaurant. Or perhaps you want a certain song played at the funeral. If so, talk with your family members about your wishes and make sure they'll agree to follow through with them. Then put that in writing in a final arrangements document, separate from the will, and have someone sign it as a witness. Your attorney can let you know where this document should be kept. Contact an estate planning attorney for help.
