7 Essential Estate Planning Documents
There are a few essential estate planning documents that everyone should have, regardless of the size of their estate. These documents can help ensure that your wishes are carried out and that your loved ones are taken care of in the event of your death or incapacity.
- Last Will & Testament
- Durable Power of Attorney – Finances
- Durable Power of Attorney – Healthcare
- Living Will
- Beneficiary Designations
- Digital Assets
Last Will and Testament
A will is a legal document that sets forth your wishes regarding the disposition of your property after your death. You can use a will to designate a specific beneficiary for each of your assets, or you can leave everything to be divided according to a predetermined formula. You can also use a will to appoint a guardian for your minor children.
To be valid, a will must be signed by you and witnesses under the laws of your state. If you die without a valid will, your property will be distributed according to the laws of intestate succession, which may not reflect your wishes. Therefore, it is important to consult with an attorney to ensure you properly execute your will.
Durable Power of Attorney for Finances
A Durable Power of Attorney for Finances is a document that allows you to appoint someone to manage your finances if you cannot do so yourself. This can be due to illness, injury, or even death. The Durable Power of Attorney for Finances gives your appointee the legal authority to make financial decisions on your behalf, including paying bills, investing funds, and managing property.
This can be a helpful tool if you become incapacitated and cannot take care of your finances. It is important to choose someone you trust to manage your finances, as they will have a great deal of control over your money. You should also discuss your financial affairs with your appointee so that they understand your wishes and can make the best decisions on your behalf.
Durable Power of Attorney for Healthcare
A Durable Power of Attorney for Healthcare is a legal document that gives someone else the authority to make healthcare decisions on your behalf. This can be useful if you become incapacitated and unable to make decisions for yourself or want to have someone else handle your healthcare affairs.
The Durable Power of Attorney for Healthcare can give the person you designate authority over a wide range of healthcare matters, including consenting to or refusing medical treatment, authorizing the release of medical records, and making decisions about life-support. It is important to choose someone you trust to make these decisions, as they will be binding. You should also discuss your wishes with the person you designate so that they know what you would want in different situations.
A living will, also known as an advance directive, is a legal document that outlines your wishes for medical care if you cannot communicate your decisions. While it is often created in advance of a debilitating illness or injury, it can also be used to express your wishes if you are suffering from a terminal condition.
A living will allows you to appoint a healthcare proxy who will make decisions on your behalf under your stated preferences. You can also use a living will to indicate whether you want to receive life-sustaining treatment, such as artificial ventilation or feeding tubes. Importantly, a living will go into effect only if you cannot express your wishes. As long as you can communicate your decisions, your living will is not used.
A trust is a legal arrangement in which someone, called the trustee, holds property or assets for the benefit of another person, called the beneficiary. The trustee manages the property or assets according to the trust agreement terms.
The trust agreement is the document that sets out the rules for how the trust should be managed and what should happen to the property or assets when the beneficiary dies. Trusts can be used for various purposes, including managing property or assets, providing for family members with special needs, and minimizing taxes.
Trusts are created by a trust agreement signed by the person who makes the trust (the settlor) and the trustee. The agreement sets out the rules for how the trust should be managed and what should happen to the property or assets when the beneficiary dies. Trusts are governed by state law, and the terms of the trust agreement must comply with state law.
A beneficiary designation is a document that allows you to designate who will receive your assets upon your death. This can include your bank accounts, life insurance policy payouts, and retirement account balances.
One of the advantages of a beneficiary designation is bypassing the probate process. Probate is a court-supervised process that can be time-consuming and expensive. By having a beneficiary designation in place, you can ensure that your assets are distributed according to your wishes.
Your assets will be transferred directly to your beneficiaries without going through probate. Another advantage of a beneficiary designation is that it can be changed.
If you need to change who you have designated as your beneficiaries, you can update your beneficiary designation form. This allows you to change your beneficiaries as your life circumstances change.
More and more of our lives are going digital, and our estate planning documents should reflect that. You should consider what will happen to your online accounts, social media profiles, and digital files after your death or incapacity.
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