You know you need to do estate planning. You have always assumed that just means drafting a will. You assume you can split your financial assets evenly between your two children, give one of them the house and the other the vacation cabin, and then split up minor assets simply based on who wants what. It should be fast and simple. That's all there is to it.
It's not. While it is good that you started thinking about writing a will and doing estate planning, it's almost never that simple. For instance, you also need to think about your legal power of attorney and your health care power of attorney. These documents are almost as important as your will.
The goal of both documents is to plan in advance for the events that could take place near the end of your life. Remember, that does not always happen as quickly and smoothly as we'd like to imagine. If you plan for what happens to your assets after death, you are neglecting to plan for what happens to them when you are still alive, though in no condition to take care of them yourself.
A legal power of attorney
The legal power of attorney essentially picks someone else -- usually an heir, like your oldest child -- and allows that person to make your big decisions for you. This person may also get access to your accounts.
For instance, imagine that you suffer a stroke and can no longer communicate with your heirs. While you get treatment, someone needs to pay your hospital bills, pay your taxes, pay off your car, send in mortgage payments and much more. You may get checks that someone needs to cash or have money in investments that someone needs to move to your bank account.
These are all examples of things you would have taken care of before, but the power of attorney gives someone else the legal right to do them on your behalf.
A health care power of attorney
The health care power of attorney is similar, but it relates to medical decisions and care. For instance, you may be unconscious. Doctors want to do surgery, but you cannot sign off on it. By picking someone else to make the decision beforehand, you know that a person with your best interests in mind is choosing the type of care you'll receive. This person may also need to make decisions about whether or not to use life support, when to stop medical treatments and what procedures doctors are allowed to carry out.
A full estate plan
As you can see, estate planning is complex and involves far more than a will. Make sure you know what options you have.