As you prepare to organize your personal and financial affairs through estate planning you will be reducing the potential of family drama if they are faced with your possible mental incapacity or death. There are several key documents to have to ease the estate planning process. These are considered essential legal estate planning documents.
Age does not discriminate when it comes estate planning. At age 18, as a legal adult, you can begin the process. Our estate planning services can ensure you have the correct documents secure the process.
The Last Will and Testament, Health Care Proxy, Living Will, and Power of Attorney are four essential documents for estate planning. These documents are necessary if your family and/or financial situation does not have a need for a revocable living trust.
If you have complex needs, you may need a more detailed estate plan. A Trust-Based Estate plan is a foundational plan that includes four important documents: Pour Over Will, Revocable Living Trust, Health Care Proxy, and Power of Attorney.
Document Types and Differences
The Last Will and Testament is used in a will-based estate plan. The Last Will and Testament, also known as a pour over will, typically has a detailed list of directives to carry out your last wishes for your property or divisible assets. A Last Will and Testament can also include provisions regarding guardianship over your minor children.
If you have a trust-based estate plan, the Last Will and Testament serves as a safety net of sorts. If there are assets that you did not transfer to your trust prior to your death, the Last Will and Testament ensures the final process. This type of will often contains minimal directives, and is often referred to as a Pour Over Will. The revocable trust is the main governing document with your estate plan.
Since we have referenced a Revocable Living Trust, let’s explain in more detail. The Revocable Living Trust is a document that ensures your final wishes are performed in 3 distinct periods of your life. This includes time periods of being healthy and alive, alive and mentally incapacitated, and at the point of death. If you have assets that are transferred to your trust, they will avoid being in probate with the state authority.
In the event you are incapable of making health related decisions, a Health Care Proxy document is needed. This document allows you to designate someone you trust to make these decisions when it is necessary. If a court decides that you are mentally incapacitated, this document can also ensure who you want to be your guardian or conservator.
No one ever wants to be faced with the decision of a “DNR” order for their loved one. Your Health Care Proxy ensures that your wishes are known, and carried forth. This document contains specific directives regarding life-sustaining procedures if you have been medically diagnosed with a terminal illness, or in a coma. The Health Care Proxy can also provide guidance to your loved ones during such a difficult time.
In the event you are incapable of making health related decisions, a Health Care Proxy document allows you to designate someone you trust to make these decisions when it is necessary.
If you are completely incapacitated, you will need someone to manage your financial affairs. A designated Attorney-in-fact ensures that your financial affairs can be managed by someone else. The Power of Attorney gives them the ability to manage assets, retirement plans, access funds, and transfer assets to a revocable living trust. A power of attorney is essential in estate planning. This type of document is available in two forms: Durable Power of Attorney or a Springing Power of Attorney. The Durable Power of Attorney is a legal binding document as soon as it is signed, and the Springing Power of Attorney takes effect when a person is declared mentally incapacitated.
A conversation with an estate planning professional can give you a clear perspective on your needs, and can help you carry out your final wishes.
