The 4 Most Crucial Documents To Have in Your Estate Plan

Your estate plans are a firm, legal method for protecting your family. Putting legal documentation in place to ensure your family is safe and provided for is a terrific way to prove how much you care about them. Should of anything unfortunate happen to you, in the realms of injury, accident, or illness, these estate plans will help make sure that your assets transfer to your family and not to the state.

Here are the four main parts of an estate plan, and what you should know about them:

1. Revocable Living Trust

A living (inter vivos) trust, is similar to a Will, but it goes into effect while you are still alive. It is called “revocable” because you can change it anytime as you see fit. As your wishes change or your circumstances change, you can adjust the living trust accordingly. With a living trust, you transfer your property into a trust, and the trust manages the property as you specify. It is important to note that a living trust is kept private after your death, and a living trust avoids probate.

2. Last Will and Testament

Your Last Will and Testament governs your possessions and dependents. Whatever your final wishes are regarding their care, this is where you clarify those wishes. This includes the status of your accounts and whatever you own (including business interests). It also addresses custody wishes, in the event that you have dependents under the age of 18.

You will also name a person to be the executor of your estate. This person is responsible for administering your wishes as specified in the documents. The state’s probate court oversees what the executor does, to make sure he or she is following the wishes outlined in your Last Will and Testament.

If you die without a valid Will, then you die “intestate.” If this happens, then the Court will appoint an Administrator of your estate. State laws determine how to distribute your property and investments, as well as who gets paid first.

3. Power of Attorney (POA)

Your power of attorney (POA) is a document that authorizes someone else to act on your behalf. This person you designate, called the “attorney in fact,” can make business, financial, and legal decision for you if you are unable or cannot make those decisions. An estate lawyer can help you create a POA that is right for you.

There are different types of POA documents:

• A “springing POA” is executed as a legal document, but it will not go into effect unless you become incapacitated. For example, in the event of a car accident, a severe stroke, or some other kind of event that severely injures you this POA will apply.
• A “durable POA” takes effect immediately. If you sign a durable POA authorizing your daughter to manage your financial affairs, then she can begin overseeing your bank account immediately.
• A “financial POA” refers only to managing financial affairs. In many cases, a child working with a financial POA documents will pay bills on behalf of his parent, but they cannot sell real estate or liquidate other assets.

4. Advance Directives (Healthcare Power of Attorney and Living Will)

Your advance directive clarifies what medical treatment you would like, in the event that you cannot communicate with a medical professional. For example, if you fall into a coma, and you have an advance directive document explaining that you consent to being connected to a breathing apparatus and being fed intravenously, then the hospital staff will know and follow your wishes.

Whether you are creating or updating your estate plan, finding the best estate planning attorneys can be crucial to a seamless process now and after your death.