Virtually everyone knows what a will is and how it works, but this understanding has not motivated everyone to actually create one. CNBC reports that only 55% of people over 55 years old have a will. The numbers are likely lower for those who are younger and think a will is not yet necessary.
However, even having a will is not enough. A will can only address some of your end-of-life wishes and protect only some of your assets. You need other estate planning documents to fully safeguard yourself and your family in the event of your incapacitation or death.
Start with these two other documents
In addition to a will, you should also have an advance directive and a durable power of attorney:
- Advance directive: This term describes your written instructions for your medical care if you cannot speak for yourself at the time of treatment. A health care directive, or living will, covers what kind of care you wish to receive at the end of your life, such as resuscitation or life support. A durable power of attorney for health care gives someone power to make medical decisions in your behalf. You must ensure this person fully knows your desires and beliefs.
- Durable power of attorney: You also need to appoint someone to handle your finances. "Durable" means the person retains power if you become incapacitated or pass on so that she or he can act on your behalf under those circumstances.
According to the study on CNBC, only 18% of older Americans have a will, an advance directive and a durable power of attorney. Having these three legal documents is a good start in creating a strong estate planning. Still, you may benefit from other plans depending on your circumstances. They may include various trusts, a business succession plan and guardianships for any minor children or adult children with special needs.