What Estate Planning Documents Do I Need?

I’ll be honest with you.  I can’t answer that question here.

 

Now, before you give up on me, let me explain why.

 

Estate Planning can be very simple or very complex.  How simple or complex your Estate Planning Needs to be depends on a large number of factors.

 

A basic, non-nonsense, Estate Plan would generally include three to four documents (depending on where you live).  Those documents are:

  • A Last Will and Testament;

     

     

  • A Durable Power of Attorney (for financial affairs);

  • An Advanced Healthcare Directive;

    • In some states this single document is replaced by both a Living Will and a Durable Power of Attorney for Healthcare.

In my opinion, many people can accomplish their Estate Planning goals with nothing more than these three (or four) simple documents, though there are a lot of really good reasons to go beyond basic planning.

 

Here’s what these documents can do for you:

  • A Last Will and Testament has several purposes: 

    • Your Will allows you to nominate a person to serve as the personal representative of your Estate after you die.  By nominating someone to serve a personal representative, you can ensure that the person who will be administering your estate is competent, capable, responsible, and will honor your wishes.

    • Your Will allows you to nominate a person to serve as a guardian for minor children should you die when your children are still young.  Like selecting a Personal Representative, the ability to nominate a guardian ensures that anyone caring for your children is competent, capable, responsible, and will provide the same love and care for your children as you would.

    • Your Will allows you to decide how your property should be distributed upon death.  Using a Will to distribute your property on death allows you to pass your property on to people or organizations that would otherwise not inherit from you.  It also allows you to specifically disinherit people who otherwise would be entitled to inherit from you.

    • You can place conditions on a person’s right to inherit (whether you should do so is a different discussion).  For instance, you could make a person’s right to inherit contingent on graduation from college.  It is important to remember that not all conditions will be honored by courts, so you should do this with caution.

  • A Durable Power of Attorney for Financial Affairs allows you to designate someone to act as your agent to handle your financial affairs on your behalf.  The authority granted to your agent can become effective immediately, or it can become effective only if you become incapacitated.  The “key” to this document is that it is as Durable Power of Attorney.  A Durable Power of Attorney continues to be effective if you become incapacitated.  A Power of Attorney that is not Durable does not.  This distinction is incredibly important, and it is a mistake many people make when they use a do-it-yourself estate planning service.

  • A Living Will is a document that allows you to state your wishes regarding your healthcare and end of life decision-making so that anyone making decisions on your behalf will know what you would have wanted.  You can make decisions such as whether to remain on life support, whether to receive artificial hydration, nutrition, and pain medications, or whether to donate some or all your organs if they are viable.  Making these decisions in advance takes a huge burden off the shoulders of anyone who must make these decisions for you if you can’t make them yourself.

  • A Durable Power of Attorney for Healthcare is a document that allows you to designate someone to act as your agent to make medical decisions on your behalf.  Like the financial power of attorney, the authority granted under a healthcare power of attorney can be effective immediately or can become effective only if you become incapacitated.  By designating an agent to make healthcare decisions on your behalf, you can stop a lot of fighting among your family members about who should step in to make decisions when you aren’t able to.

  • An Advanced Healthcare Directive is a document that combines a Living Will and a Power of Attorney for Healthcare into a single document to simplify the process and reduce the number of documents your agent needs.

As you can probably see, these three (or four) simple documents can do a lot to help ensure that your estate, financial affairs, and healthcare concerns are addressed.  More complicated planning may or may not be necessary, but there are many more tools available to those whose planning goals are more complex, such as:

  • Revocable Living Trusts;

  • Irrevocable Trusts;

  • Irrevocable Life Insurance Trusts;

  • Charitable Remainder Trusts;

  • Special Needs Trusts;

  • Medicaid Trusts;

  • And many more.

By now, I hope you can see why I said that I can’t tell you what documents you need in this post.  The best I can do is suggest that you get in contact with an Estate Planning attorney to discuss your specific situation and what tools are appropriate for your situation.

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