How to Create a Durable Estate Plan

Note: This video is part of Morningstar's 7 Days to Retirement Readiness week special report.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. Many Morningstar.com readers have been fully in charge of their portfolios for their entire investment careers. But as retirement draws close, it's important to make sure your plan wouldn't go haywire if you couldn't be hands-on. There are a couple of key ways to do that.

One of the best ways to do that is to reduce the complexity in the portfolio. Even if you've been an avid investor in individual stocks or bonds, you might consider simplifying by moving into managed products, whether mutual funds or ETFs. Also focus on investments that provide a lot of diversification in a single package. Index funds and ETFs are a great example, and they also make it easy to monitor your portfolio's asset allocation.

I also like the idea of automating as much of your retirement plan as possible. Your investment provider can take out your required minimum distributions on a regular schedule, for example. I also like the idea of automating important bills, like mortgage and insurance payments and tax bills.

As we age, it's also important that we're not making investment decisions in a vacuum. Hiring a financial advisor is the gold standard to help ensure that your financial plan will stay on track no matter what. At a minimum, document everything you have and share the basics of your financial plan with a trusted person in your life, such as a spouse or adult child. We've created a master directory on Morningstar.com to help you inventory your financial assets so that you can share that information with your loved ones or financial advisor. It's also crucial to work with an estate planning attorney to draft documents such as a will and powers of attorney for healthcare and financial matters.

Thanks for watching; I'm Christine Benz for Morningstar.com.