All estate plans should include, at minimum, two important estate planning instruments: a durable power of attorney and a will. The first is for managing your property during your life, in case you are ever unable to do so yourself. The second is for the management and distribution of your property after death
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 The Simple Will: No Frills, No Fuss, No Anxiety or create an Online Will. For Islamic will please see the will details on the Jamaat notice board 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 or create a Trust Online.
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 The Living Will and Power of Attorney for Health Care: An Overview.
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 Financial Powers of Attorney: Do You Need One?
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 an Inheritance for 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 How to Avoid Probate or 8 Ways to Avoid Probate.
7. Consider life insurance. If you have young children or own a house, or you may owe significant debts or estate tax when you die, life insurance may be a good idea. For more information, see Do I Need Life Insurance? and Using Life Insurance to Provide for Your Kids.
8. Understand estate taxes. Most estates -- more than 99% -- won't owe federal estate taxes. For deaths in 2011, the federal government will impose estate tax at your death only if your taxable estate is worth more than $5 million; for 2012 deaths, the exempt amount is $5.12 million. Also, married couples can transfer up to twice the exempt amount tax-free, and property left to a spouse (as long as the spouse is a U.S. citizen) or tax-exempt charity is exempt from the tax. (For more information, see Estate and Gift Tax FAQ.)
9. Cover funeral expenses. Rather than a funeral prepayment plan, which may be unreliable, you can set up a payable-on-death account at your bank and deposit funds into it to pay for your funeral and related expenses. For more information on prepayment plans and alternatives, see The Prepaid Funeral and its Perils.
10. Make final arrangements. Make your wishes known regarding organ and body donation (if allowed according to Islamic Laws) and disposition of your body -- burial.
11. Protect your business. If you're the sole owner of a business, you should have a succession plan. If you own a business with others, you should have a buyout agreement. For more information, see Plan Ahead for Changes in Partnership Ownership.
12. Store your documents. Your attorney-in-fact and/or your executor/guardian (the person you choose in your will to administer your property after you die) may need access to the following documents:
- insurance policies
- real estate deeds
- certificates for stocks, bonds, annuities
- information on bank accounts, mutual funds, and safe deposit boxes
- information on retirement plans, 401(k) accounts, or IRAs
- information on debts: credit cards, mortgages and loans, utilities, and unpaid taxes