Most people can't wait for retirement, and even more would likely opt for some form of early retirement if they had the opportunity. Whenever you ultimately decide to cut down your time at work or leave the workforce altogether, you need to ensure that you have a full slate of estate planning documents in place. These documents exist in the event of your untimely demise or incapacitation, at which time your family will need explicit instruction as to how to proceed. Here, we'll discuss the four key documents in constructing an effective estate plan.

1. Durable power of attorney (POA)

In the event you become incapacitated or become incapable of making financial decisions, a durable POA will allow someone you trust to sign documents and manage your affairs. This is a simple document that can be filled out online, but if your situation is in any way more complex than the norm, it's advisable to have an estate planning attorney look over your POA before it's executed. You can give someone a limited POA that limits their authority to specific transactions, and you can also devise a springing POA, which takes effect at the time of your incapacitation. Generally speaking, I recommend a durable POA that covers all transactions and takes effect immediately, so you know you will have a trusted ally available to handle your affairs regardless of what lies ahead.

2. Last will and testament

Most people know what a Will is, but only between a third and a half of Americans actually have one. While it is most certainly difficult to contemplate your own mortality, it can be just as painful to think of leaving a mess for your heirs if you are no longer here. A Will appoints an executor -- one or more people who will manage your affairs in a fiduciary manner -- and outlines a plan for the distribution of your property. Furthermore, a Will provides an opportunity to create testamentary trusts, or entities that will hold property for your descendants and other heirs. 

There are numerous cases in which a Will can provide comfort to the person creating it, especially if that person has descendants who are unable to handle or manage money. It's not as if avoiding the creation of a Will in some way benefits you; if you don't take the time to create one and you haven't listed beneficiaries on any of your financial accounts, the state in which you live will simply distribute your assets for you -- and not necessarily in the same way you would have. Your Will should also be in agreement with other documents you've set up, so as not to confuse the people who read them.

last will and testament with pen and watch.

Image source: Getty Images.

3. Completed TOD/POD designation forms

Transfer-on-Death (TOD) or Payable-on-Death (POD) designations allow you to assign your investment accounts to a named beneficiary. The central benefit here is that accounts with a named TOD/POD beneficiary, such as taxable brokerage accounts with stocks, pass directly to that person in the event of your death. Any accounts that do not have a TOD/POD beneficiary will be subject to the terms of your Will, and ultimately will need to go through a complex and potentially expensive probate process before they are actually received by the beneficiary. It's key to take the time to fill out these forms -- which can be found online in most cases -- to ensure the people and organizations you want to inherit your accounts will do so quickly and for free. 

4. Healthcare POA/advance directives

The importance of health-related documents -- even if you fill them out once and never look at them again -- cannot be understated. A healthcare POA is in place for a designated representative to be able to communicate your wishes to medical professionals if you are unable. These documents also include instructions as to whether or not you want to have life-saving measures performed should you experience cardiac or respiratory arrest. Once again, these documents are absolutely critical, as those whom you name as healthcare agents will literally have your life in their hands. Creation of healthcare documents also removes the need for your family members to make heart-wrenching decisions for you, which can be especially concerning if those decisions wouldn't necessarily match your own. 

Invest the time to update your documents

Once you've created these critically important pieces of your estate plan, you've done 95% of the work. The remaining work lies in ensuring that each document agrees with the others to the extent possible, and reviewing all of them each year to confirm that no changes are required. The subtext of these documents isn't always the most exhilarating, but in a strange way, going through this exercise every year can provide a reassuring sense of control and liberation.