What important estate planning documents does a person need? Estate planning attorneys (such as the author) are the best qualified to answer that question. We counsel on and prepare the documents our clients need to avoid the problems that accompany death and incapacity on a daily basis. Those topics are, not surprisingly, ones many people simply don’t like to think about let alone discuss.
What do Aretha Franklin, Kurt Cobain, and Prince have in common? Aside from being famous and talented, each of these stars passed away without a will. All three had the money and attorneys available to draft a proper estate plan, but they didn’t get it done. Take that as a lesson on what not to do.
Motley Fool reports in the article, “3 Must-Have Estate Planning Documents To Get Done This Year,” that dying without a will creates numerous problems for your family. If you die without a will (or a will substitute, such as a living trust), the judge of your local probate court dictates the distribution of your assets according to state law, and will select guardians for your minor children. Read that last sentence again. If that applies to you, how do you feel about that?
Seriously folks, if you haven’t already done so, you should make plans to create these three important estate planning documents ASAP:
Will
A will is used to distribute your estate (what you own at the time you die) according to your instructions. A will can be very general (i.e. “if my spouse does not survive me, I give my all of my property to my children in equal shares”) or it can specifically say who gets what. The important lesson here is to get the will in place. You can always change or add to it later on.
If you have young children, you will also is the document you’ll use to designate guardians to be in charge of their care and to look after the money or other property you leave behind for them until they are of appropriate age. Again, if you die without a will, the probate judge will make those determinations for you with absolutely zero input from you.
When you draft your will, you’ll appoint trusted people to serve as the executor. An executor is the person in charge of admitting your will to the probate court and facilitating the process required to transfer your assets.
Note, many people, especially if they own any real estate, choose to use a living trust as a will substitute, which keeps things private (out of the courtroom) and reduces time and expense considerably. Even when a living trust is used, however, there should still be a short will in place, referred to as a “pour-over” will, which directs any miscellaneous property owned by the client at the time of their death into their living trust and names guardians for any minor children.
Advance Healthcare Directive (“Advance Directive”)
This legal document sets out your instructions for medical treatment if you become unable to communicate, including what conditions you would or would not want to be placed on life support. Your advance directive can relieve the emotional burden from your family of having to make those difficult decisions on their own.
Power of attorney
This legal document helps in the event you’re incapacitated or in the hospital in an unresponsive state. A power of attorney gives the individual you designate the authority to transact financial and legal matters on your behalf. Set up a power of attorney, before you need it After you need it, it will likely be too late, and your loved ones will have to petition the court to get those powers through a conservatorship proceeding (no bueno). Conservatorships are time consuming, expensive, ongoing, and public.
Hopefully the above helps you see what a huge favor that you do for your loved ones by completing your estate planning documents.
Reference: Motley Fool (February 18, 2019) “3 Must-Have Estate Planning Documents To Get Done This Year”