Estate Planning for Everyone

by Mary Randolph, J.D.

Simple steps for creating an estate plan that will put your mind at ease.

1. Make a will.
In a will, you state who you want to inherit your property and name a guardian to care for your young children should something happen to you and the other parent. For more information, see Making a No-Frills Will.

2. Consider a trust.
If you hold your property in a living trust, your survivors won't have to go through probate court, a time-consuming and expensive process. For more information, see the Living Trust FAQ.

3. Make health care directives.
Writing out your wishes for health care can protect you if you become unable to make medical decisions for yourself. Health care directives include a health care declaration ("living will") and a power of attorney for health care, which gives someone you choose the power to make decisions if you can't. (In some states, these documents are combined into one, called an advance health care directive.) For more information, see Health Care Declarations and Powers of Attorney for Health Care: How They Work.

4. Make a financial power of attorney.
With a durable power of attorney for finances, you can give a trusted person authority to handle your finances and property if you become incapacitated and unable to handle your own affairs. The person you name to handle your finances is called your agent or attorney-in-fact (but doesn't have to be an attorney). For more information, see Do You Need a Financial Power of Attorney?

5. Protect your children's property.
You should name an adult to manage any money and property your minor children may inherit from you. This can be the same person as the personal guardian you name in your will. For more information, see Leaving Property to Young Children.

6. File beneficiary forms.
Naming a beneficiary for bank accounts and retirement plans makes the account automatically "payable on death" to your beneficiary and allows the funds to skip the probate process. Likewise, in almost all states, you can register your stocks, bonds, or brokerage accounts to transfer to your beneficiary upon your death. For more information, see Ways to Avoid Probate.