Feb
8
Just the words “estate planning” can conjure up visions of laborious and complex work. Although this could be the case for larger estates, a basic will package can be relatively straightforward, attainable and something everyone should employ.
Below are the basic estate planning documents that most people will need:
- Last Will and Testament: Assets that pass through the probate process are typically distributed based on instructions set out in your will. These assets could include your home, checking account, or investment accounts. Your will appoints an Executor to be the person who will handle the closing of your estate. Wills may also create a trust upon your death to hold assets for your loved ones. A will is of particular importance if you have minor children as you will name a Guardian to care for them if you pass away before they reach age of majority.
- Financial Power of Attorney: This document allows the holder to conduct financial affairs on your behalf during your lifetime. If you are no longer able to handle your financial affairs due to an illness or injury, this document is invaluable. For example, if your spouse owns an investment account, the spouse relationship alone does not necessarily give you access to this account.
- Health Care Power of Attorney: Similar to a Financial Power of Attorney, this document gives your appointed agent the right to make health care decisions on your behalf if you are incapacitated. These powers include decisions relating to your medical needs such as a necessary surgery or a medical procedure.
- Directive to Physicians: Sometimes referred to as the Living Will, this document directs your medical provider as to how you would like to be treated if you are in a terminal condition. Do you want to continue to be sustained by life support at any cost regardless of prognosis or do you simply want to be kept comfortable?
- Declaration of Guardian: This document appoints a guardian of your person and your estate. The Guardian of the Person is the individual who will feed, clothe, and shelter you when you are not able. While the Guardian of the Estate will handle your financial affairs.
Valid wills are sometimes created by hand or downloaded from the internet. However, engaging an attorney to help you develop an estate plan is advisable to avoid potential errors and costly litigation. Any attorney can create these documents but hiring an attorney who specializes in trusts and estates is highly recommended.
A thorough review of your beneficiary forms for IRAs, 401(k)’s, and life insurance policies is also recommended. Your attorney can guide you through properly titling your financial accounts and designating beneficiaries to avoid the necessity of probate for certain types of accounts. In addition, there are other estate planning and asset protection tools that may warrant discussion such as family limited partnerships, revocable living trusts, and life insurance trusts.
Having proper legal documents will help provide and protect you during your lifetime, as well as distribute your assets according to your wishes upon your death. Those you care about will be better served because your final requests are well documented.