In this step, you need to actually draft your estate plan. It involves creating the documents that are most appropriate for your situation.

As a first step, we recommend that you take the time to assess what you will be worth upon death and how it will affect your family. In a previous section, we had you inventory your assets and create a personal balance sheet. If you did it and did it correctly, it basically shows you how much you are worth if you die today, which is different than how much you're worth right now. That's because it includes any life insurance that you own, death benefits from your retirement plans, or any other insurance benefits you might have. If you didn't do it, consider it now.

The second step is to prepare a will. The simplest way to create this will is to write down your instructions. A second way, and still simple, is to purchase one of the many will-making software packages on the market. You should find the software very easy to use, and it will identify all the forms that you might need. Finally, and especially if you have complex instructions or a large estate, please consult an attorney. Whichever way you choose, draft this will and remember that it needs to address distribution of assets, guardianship (if necessary), and possibly burial and funeral instructions. You can review the material on each of these items using the respective links. When you have it completed, make sure you have this document witnessed and notarized.

As part of this process, since you are addressing how you want your assets distributed, it is a good time to check the beneficiaries on your retirement plans and insurance policies, because your will does not apply to these or most other jointly held assets.

The third step is to create a living will which indicates if you want certain medical treatment withheld or withdrawn in certain medical situations. At the same time, you might as well as generate the health care proxy, since in some states they have both been replaced with the medical directive. The proxy designates someone to make health care decisions for you in the future when necessary. You can get copies from estate-planning attorneys, stores that sell legal forms, or through various sources on the Internet. Additionally, if you purchase the will-making software, the forms should be available.

The fourth step is to generate a durable power of attorney designating someone to be responsible for your finances if and when you can't take care of them. Choose wisely because this person will have control over your finances. Also discuss the matter with this person to make sure they are willing to be responsible for your financial estate.

Once you have created the will, living will, health care proxy and durable power of attorney, you may wish to visit with an estate-planning attorney. First, they can review your documents and make sure they are accurate and complete. Second, they can ensure that you take the proper steps to validate and legalize these documents. Third, they can discuss various items with you that you may not have considered, and they can advise you on how a trust might help avoid taxes on your estate, if this is a concern.

Step Six - Review your plan