5 Essential Estate Planning Documents
Estate Planning often requires multiple tools to protect one's estate from unneccessary fees and delays. Below are five essential documents to consider when establishing an estate plan:
Will – Who should receive your property upon your passing? A Last Will and Testament is an estate planning document that allows an individual to provide instructions to an executor as to how to distribute the individual’s property upon death. Wills come in a variety of shapes and forms and must be designed with the individual’s needs in mind. For this reason, seek sound legal advice before deciding which will is appropriate. Using the wrong kind of will can result in problems during probate.
Trust – Can you save money on attorney’s fees and costs? A Living Trust (a.k.a. Revocable Trust) is an estate planning tool that holds the individual’s assets allowing them to control the assets as the trustee of the trust. In using a living trust, the individual names a successor trustee to distribute the individual’s assets upon his or her passing according to the individual’s instructions. Assets held in a trust do not require a probate in order to be transferred to beneficiaries. Because probate is not required, living trusts can greatly reduce future legal expenses.
Financial Power of Attorney – Who controls your finances in case of an emergency? A Financial Power of Attorney allows an individual to appoint an agent to make financial decisions for the upon incapacitation. Incapacity can be temporary or permanent. Using a Financial Power of Attorney allows the individual’s agent to access financial accounts, pay bills, and use the individual’s money for the individual’s benefit during the incapacitation. Without a Financial Power of Attorney, an individual’s relatives must file for a conservatorship of the estate in order to control the individual’s finances. This can result in legal costs and delays in accessing the individual’s assets.
Advance Health Care Directive – Who will make medical decisions for you in case of an emergency? Similar to a Financial Power of Attorney, an Advance Health Care Directive allows an individual to appoint an agent to make health care decisions for the individual in the event of incapacitation. An Advance Health Care Directive provides the agent with the ability to make decisions regarding medical treatment, allows the agent the ability to receive medical information from health care providers, and make end-of-life decisions for the incapacitated individual. Creating an Advance Health Care Directive allows the individual to communicate to the agent whether to keep the individual on remove them from life support. Without an Advance Health Care Directive, an individual’s family may have to file for a conservatorship of the person to obtain legal authority to make these important decisions.
Guardianship Designation – Who will take care of a minor child if you pass away? Guardianship provisions allow a parent of minor children to name a guardian of minor children at the parent’s passing. These designations provide the court with one’s wishes as to who should be legal responsible for the minors. Without stating one’s wishes, courts are left to make the decision. With guardianship designations, courts generally appoint the named guardian unless good cause exists to deny the nomination. Such grounds for denial can include financial irresponsibility, criminal convictions, and history of substance abuse or physical abuse of others.
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