Editor’s Note: This article is the first part of a two-part series on the basics of estate planning. This article will introduce and explain the basic estate planning concepts. The second article will address the roles and responsibilities of persons involved in estate planning and the types of assets associated with beneficiary designations. Part two of the series will be published in the Dec. 1 issue of Ophthalmology Times.
Estate planning is not a financial concept for just high-income individuals. These concepts apply to everyone, regardless of age or net worth. These concepts can not only help individuals protect and care for themselves and their families at the time of death, but also during their lifetime.
There are five key estate planning documents–four of which everyone should have.
As part of a basic estate plan, individuals should have a will, a durable power of attorney for financial matters, a health care power of attorney, and a living will. These documents will help you control your assets and health care decisions while you’re living and at death.
Some people may add a revocable living trust. The first four documents provide the foundation for any estate plan and help individuals stay in control.
If you already have these documents, be sure to review them regularly. Life events, such as deaths, births, divorces, marriages, inheritances, or a change in state residency, lead to changes in one’s goals–so these documents should change accordingly.
It is important to update estate planning documents when moving from one state to another because state laws vary. It is important to make sure that the documents are designed to work well in the state where you live. You also should review these basic documents as changes occur in federal or state estate tax laws.