A lot of people hate discussing estate planning, but it is essential. Once you're gone, you do not want to add more stress to your family and friends. These five documents can provide the foundation for your estate plan, but be sure to consult with a lawyer or appropriate authorities when making your plan.
1) Will - A will is simply a set of instructions on how to distribute your assets to loved ones and charities upon your death. Be aware, however, that a will is subordinate to any beneficiary designations you have made on investment and retirement accounts.
2) Durable Power of Attorney - You name another person to act on your behalf, with limited or broad powers as you see fit. Choose carefully because this person can, in essence, buy and sell your assets. A "durable power" lets someone act on your behalf if you are disabled and terminates upon your death.
3) Health Care Power of Attorney - This document authorizes someone to make medical decision on your behalf if you are unable to.
4) Living Will - This document lays out your wishes regarding the use of life-sustaining measures in the event of terminal illness. It's best used in tandem with a health care power of attorney since a living will alone doesn't give anyone authority to speak for you.
5) Revocable Living Trust - Broadly speaking, this document provides for management of financial affairs during your lifetime, upon your death and for future generations. This trust helps your estate avoid probate, lessening the risk of personal information becoming public record.