How to overcome your estate planning blues: "it takes time, costs money, raises difficult family issues, and revolves around something most of us do not want to think about—death."

Living wills

A living will is an individual's written declaration of what life-sustaining medical treatments he or she will allow or not allow in the event he or she becomes incapacitated. Though not always honored by medical institutions, a medical durable power of attorney authorizes a third party, such as a spouse or adult child, to make medical decisions on your behalf, ideally to carry out what you've expressed in your living will.

While you can save money by creating some of these legal documents on your own with software or standardized forms, most adults should have a competent estate planning attorney draft the documents. Otherwise, you risk legal complications, challenges, or overlooked details that could derail your intentions and create a headache for your heirs.

Whether you will need estate planning tools in addition to these four basic documents will depend largely on the size, complexity, and circumstances of your estate. For instance, as the story about the sudden death of the 48-year-old remarried father illustrates, a second marriage may require the careful renaming of beneficiaries on life insurance policies and retirement accounts, the retitling of assets, mad perhaps the use of trusts. Some of these tools are relatively inexpensive and easy to apply; others are more expensive and involved.

Research the titling of your assets. Most couples own property jointly, usually with rights of survivorship. Upon the death of the first spouse, the jointly owned properly passes directly to the surviving spouse. This is easy and avoids probate, but it's not always the best option. You might want property separately owned so that it passes to the children from a previous marriage, protects the surviving spouse from some of the other spouse's debts, or saves estate taxes.

Another simple strategy to avoid estate taxes is to gift assets while you're alive, thus taking advantage of the annual gift-tax exemption. You can give away each year to each person you choose up to $11,000 free of any gift tax. (The amount is indexed for inflation in $1,000 increments, so periodically the exempt amount increases.) If you gift jointly with your spouse, you can give away $22,000 a year to each person.

A more complex, and sometimes expensive, estate planning instrument is the trust. A trust is a legal vehicle for holding and managing property for the benefit of the creator of the trust or other beneficiaries. You probably have heard of the popular living trust, used mainly as a way to control assets while you're alive and to avoid probate. (It does not, despite popular belief, save estate taxes.) There are more than 50 types of trusts, suited for all types of needs. Many, such as the credit shelter trust, are used to help save estate taxes. Others are designed to control assets even after the person who created the trust has died. For example, a trust might not release assets until the beneficiary has reached a mature age or achieved a certain goal such as graduating from college. A trust might manage assets for someone who is incapacitated or not competent to handle investments.