When the words “Estate Plan” are mentioned, many people conjure up images of a stodgy attorney reading a letter to a group of formally dressed relatives in the library of a mansion… just waiting to see who will get the millions. In reality, nothing could be further from the truth. An Estate Plan is much more than a Will and ALL OF US need one (not just the rich and famous). Without a proper Estate Plan, your wishes may not be carried out and your family may spend weeks or months going through the probate process.
Most people know they need a Will, but unfortunately many people are not aware that a Will is only one of the essential documents of an Estate Plan. A properly constructed Estate Plan will ensure that all your wishes are carried out near the end of your life and after you pass. It will save your family time, money, and reduce administrative burdens. A proper Estate Plan is a true gift to those you love. But what are the key documents you need and why?
Will is a written document that states how you wish your financial assets and material property to be distributed upon your death. It can also name who you want to be the guardian of your children should you and your partner pass. You should make sure that the person you name as guardian to your children is fiscally and physically able to do so. A Will should be updated when major life events occur such as a marriage, divorce or the birth of a child.A Will is governed by state law, therefore if you move to a different state, you need to have your Will reviewed by an attorney to make sure it meets all legal requirements of your new state of residence. A key aspect of your Will is to name an executor of your estate.The is the person who will have the legal responsibility of settling your financial affairs.
Revocable Living Trust
Unlike a Will, a Living Trust can be used to distribute property while you are still living. A Will does not go into effect until the date of your death whereas a Trust goes into effect the date it is signed and notarized. The biggest benefit of a Trust is that it bypasses probate court. ESTATE PLANNING AND PROBATE. You can name the person responsible for executing the wishes of the Trust. It is usually yourself while you are living and then a family member or trusted advisor upon your death. If you are wealthy, a Trust can be structured to save your estate costly taxes.
Durable Power of Attorney
A Durable Power of Attorney names a person to act on your behalf, while you are still living, should you become unable to do so. This can make a profound difference in your life no matter your age. Without a Durable Power of Attorney, your family’s hands may be tied should you become incapacitated. Some estate attorneys consider this document as important as a Will. Do not put this off as you must be legally competent to create this document.
Medical Power of Attorney
A Medical Power of Attorney names someone who can make healthcare decisions for you should you become incapacitated. This is different from a Durable Power of Attorney that designates someone to handle your financial and legal affairs. A Living Will lets you voice what type of end of life care you do or do not want in the event you are unable to communicate these wishes.
Sadly, accidents and illnesses can impact people of all ages. It is important to put powers of attorney in place while you are young adults.
Most financial accounts such as retirement plans and life insurance policies require you to name a beneficiary for that specific account. These designations have priority over anything written in a Will that may contradict them. You should keep a list of your beneficiaries with your Will so that you know they are up-to-date at all times. You should consider updating your beneficiaries at an account level if your marital status changes or if there are significant events in your children’s lives.
Letter of Intent
A letter of intent does not hold legal status in a court of law, but it is a means for you to communicate to your family your wishes and desires that do not belong in a Will or Trust. The most common example is your funeral wishes: how and where would you like your remains honored.
Provision for digital assets
Make a list of your digital assets and passwords and decide what you would like to be done with them and who you would like to execute these wishes. Your digital assets include your photos and social media pages such as Facebook, Instagram, Twitter and Linkedin accounts.
Lastly, in the event of your death your family will be grieving. Make their grief a little easier by being prepared. Make a list of all your important documents and where to find them. The list should include the documents listed here as well as your bank accounts, titles to your house or cars, the phone numbers of your financial team (estate attorney, financial advisor, accountant), birth certificates, adoption records and divorce decrees. Keep this list in a safe place such as in a safe or in your attorney’s office.
This truly is a tremendous gift you can leave those who you love most.
The information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.