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No one wants to think about the end, but you don't want to leave your loved ones without guidance either. These four documents will help you plan for the future.

Estate planning is like cutting the lawn or taking out the garbage. It's one of those mildly unpleasant things that tends to be put off, but when finally done, gives a sense of relief. Whew! Got that out of the way! Except that putting off estate planning can have much more serious consequences than smelly garbage or overgrown lawns. The actual process of estate planning is not unpleasant in itself. It's just that you must think about subjects you would rather not deal with: injuries, illness and death. But as you will see in this article, the consequences of not planning your estate can be very bad for the loved ones you leave behind. Estate planning should never be put off, because you never know when your last moment will come.

There are four basic documents everyone should have: A durable power of attorney, a health care proxy, a living will, and a last will and testament. I don't care if you're worth $100 million or $100, everyone should have these documents. It's about much more than money; it's about softening the emotional impact of illness on your family and avoiding placing burdens on those you love. It's about protecting yourself against needless suffering and controlling your destiny. And, yes, it's also about money.

Durable Power of Attorney
This document allows another person, designated by you, to act as your "attorney in fact," that is, to handle financial and other nonmedical affairs in the event you are legally incompetent. "Incompetent" is a term used to describe a medical condition--sometimes temporary, sometimes permanent--that prevents you from understanding what's going on and completing everyday tasks like writing a check or signing your name. Accidents, strokes and various illnesses are the usual causes of incompetence. With this document, the person you have designated can access your accounts, sign documents on your behalf, pay your bills, and perform other needed tasks.

Naturally, the person you choose should be someone you trust completely: a child, a spouse, a sibling or another loving and trusted person. The chosen person should also have common sense and an understanding of what they must do. The person must be trusted to act intelligently on your behalf.

Usually husbands and wives will designate each other, but there must always be a successor designated in the event both spouses are incapacitated. Don't make the mistake of thinking that because you are married and own everything jointly, you don't need this. There are many financial instruments you cannot own jointly--retirement plans, for instance. If one spouse is stricken and the other spouse needs to access funds from the stricken spouse's IRA, the healthy spouse will not be able to get this access because IRAs and retirement plans can only be held in one name. Another instance is signing for a real estate closing. A couple may have a house in contract, and if one spouse is stricken, the other spouse may use the durable power of attorney to sign for the stricken spouse.

If there is no durable power of attorney in place, your spouse or family must hire attorneys to petition a surrogate court to get that power of attorney. It's expensive, time consuming and emotionally draining on loved ones who already burdened by the impact of your condition. Having this simple instrument drawn up provides an inexpensive solution.

Be aware of the difference between a regular power of attorney (POA) and a durable power of attorney. A regular POA cannot be used when the person who granted the POA becomes incompetent. A durable POA may not be used if a person is not incapacitated. It's only valid in case of incompetence, and medical proof is usually required to activate it. Some states allow a combination of these two types of POA, sometimes called a "jumping" POA.

Health Care Proxy
This legal document permits someone else to make medical decisions for a person when that person is incapacitated and incapable of making such decisions. The health care proxy may be the same person who holds the durable power of attorney, or it may be someone else. In either case, the person named should be able to exercise good judgment in the face of the emotional trauma and make sound medical decisions on behalf of the individual. Very often spouses will designate each other as health care proxy. A health care proxy document only allows medical decisions; a durable power of attorney allows all others to be made on behalf of the person, but no medical decisions. This is why both documents are needed. Failure to have a health care proxy in place may mean that in the case of your incapacitation, medical decisions would be made by a hospital committee instead of a trusted relative or friend who understands your wishes.

The living will addresses a person's final days. It answers the question, of when all hope is gone and death is inevitable, do you want to be hooked up to machines and kept going for an additional week or two? Most people would answer no. Quality of life would be nonexistent, perhaps painful, and to what end? It certainly won't make relatives feel better to drag out death a few more days through the use of machines. The living will spells out your wishes when the end arrives. It specifically states what may or may not be done. Usually the language in a living will requires that everything be done to make the last hours comfortable and as pain-free as possible. Feeding, hydration, comfort and pain control may be demanded whereas heroic measures (machines) that can artificially prolong life for a few days or weeks are prohibited. Consult with your doctor for what should be allowed and specifically articulated in your living will. Without a living will, a hospital committee will usually elect to keep you artificially living a bit longer; they are often duty bound to do this simply because you have failed to express your wishes through a living will.

I want to make an important point at this time. Many readers may be in their 20s or 30s and feel they are too young to worry about such things. Everyone should have this document drawn up, so there is no question. The recent tragic case of Terry Schiavo touched hearts globally, and caused gut-wrenching reactions here in the United States involving all three branches of the federal government. Her family, which at one point may have had good relations, has been torn apart by animosity. However, if her final wishes had been expressed by means of a living will, much agony might have been avoided. More than half a million dollars would have gone for her care and legacy instead of paying lawyers. The lesson is clear: Everyone should have a living will.

Last Will and Testament
Known as the "will," this instrument directs the disposition of a person's estate after the person dies. In a sense, everyone has a will whether they had one made or not. When a person does not have a will and dies, that is called dying "intestate." The states have specific laws that govern the distribution of the estate. So everyone has a will after all. It's just a matter of deciding whether you will direct the disposition of your estate to those you want or let the state do it according to how legislators believe your estate should be distributed. The choice is pretty clear. Everyone should have a will drawn up to carry out their last wishes.

A will can handle much more than just who gets what. It can also spell out how it is received. For example, a well-loved, but irresponsible adult child or relative may receive an inheritance by means of a trust in which a responsible trustee is appointed to make sure the funds are not squandered. "Testamentary trusts" may be created by the will or "inter-vivo trusts" may be created during your lifetime. Trusts are also either revocable, which means the grantor can revoke it, or irrevocable, which as the name implies, cannot be changed even by the grantor. Always consult with a competent attorney before setting up trusts.

In addition to trusts, a will can name guardians for children and specify certain properties that a person wishes to remain in the family. An executor (male) or executrix (female) is named to handle the disposition of the decedent's property according to the decedent's wishes, and a probate court supervises the whole thing. A will is actually a very complex instrument--even so-called simple wills--and should only be drafted by a competent attorney within the state of residence.

All of the above documents are regulated according to the laws of the individual states. Many states have provisions for blending these documents into one, for instance, a health care proxy may be included with a living will or a durable POA. The states regulate this, and rules differ among states. If you move to another state, you may have to have these instruments redone. Immediately check with a local attorney in that state.

Probate
There are a lot of myths circulating about probate, so let's try to clear some of them up right now. Probate is simply a court-supervised distribution of an estate according to the directives set in a decedent's will. For modest estates in New York, this goes relatively easily and usually can be done by the executor without an attorney. Larger estates and special situations will require advanced estate planning strategies.

It is beyond the scope of this article to provide a guide for advanced estate planning. The area of advanced estate planning is so complex that a specific guide may not be possible. It may wind up being just an encyclopedia of potential strategies and available estate planning tools. I believe that for a sizable and complex estate situation, professional help should be sought. There are many competent planning attorneys, tax accountants, financial planners, insurance agents and others who specialize in this field. As in working with any professional, be sure to check credentials and records before hiring.

A source I would recommend is Sandy F. Kraemer's The 60-Minute Estate Planner. It's an easy-to-read common sense guide to estate planning and is updated every few years. It will give you some ideas on what's involved in estate planning, and help you determine if you need an advanced estate plan as well as provide suggestions on choosing the right professionals to carry it out.

This article was excerpted from This Is Not Your Parent's Retirement by Patrick Astre, which is available on Entrepreneurpress.com.

Health Care Power of Attorney