4 Estate Planning Documents You Need
Will / Nomination of Guardian
Durable Power of Attorney
Advance Health Care Directive
You may be wondering: what are these and why do I need them? To put it simply, they are legal documents that ensure your wishes are fulfilled when you die or if you become disabled or incapacitated. In any of these events, they protect you, your estate, and your family.
The consequences of not getting these documents can be devastating for all parties involved. If you die without an estate plan, the law will create one for you. This means the law would decide who receives your property and would appoint someone to carry out financial and healthcare decisions for you. If you haven’t set out guidelines for what you want, these appointees could very well make decisions that you would not have wanted.
1. Living Trust
A Living Trust determines:
The way in which your estate will be distributed;
Who will administer your estate once you die, known as the successor trustee(s);
May place certain restrictions on how your property is used after death;
Who will manage paying for your healthcare if you are incapacitated.
You can also include incentives in your Trust to prevent disputes within your family, court involvement, and litigation.
2. Will / Nomination of Guardian
Once you have your Living Trust, you will then need a Pour-over Will. As you can gather by the name, it is a document that serves as a catch-all for any assets you may have forgotten to specifically transfer into your Living Trust. Under this document, you choose a personal representative of your Will, who is responsible for distributing your assets accordingly and transferring any leftover property into your Living Trust.
Parents: this document is also where you can nominate a guardian for your minor children.
3. Durable Power of Attorney
A Durable Power of Attorney (POA) gives a person of your choosing the ability to make financial, legal, and healthcare decisions should you become incapacitated. Among other things, this person (or persons) may control property that cannot be named in or transferred into your Living Trust, such as your IRA.
Granting a POA transfers an incredible amount of power to someone else, so it is crucial that you choose someone you trust beyond a doubt. In fact, it is common to name your successor trustee(s) as your POA.
4. Advance Health Care Directive
Your Advance Health Care Directive (AHCD) gives someone of your choosing the power to make your medical decisions should you become incapacitated. This document also establishes your wishes for end-of-life care, including your choices regarding artificial life support, donating your organs, and how your remains will be handled.
It can be uncomfortable and painful to discuss end of life matters with your loved ones, but it is essential that you make your wishes explicitly known. Doing so will ensure that your wishes are fulfilled, and your estate and family are protected. It will also spare your family from any unknown or undesired aftermath.