What does it mean to protect your legacy? In an estate planning context, it means safeguarding everything you worked so hard to achieve throughout your life — your money and property, but also your relationships and your values.
A strong estate plan can save your loved ones money and stress after you’re gone, give instructions about your healthcare and burial wishes, and generally give you a great degree of control over the way your assets are distributed.
That’s not an easy feat, but you don’t have to do it alone. Here are five documents every person should have in their estate plan.
1) Last Will and Testament
Your Will is the core of your estate plan, and for good reason: it is the most basic document that provides instructions on how your personal property should be distributed after death. It can also include directions about funeral provisions, where your sentimental possessions end up, and what happens to your children and pets after you’re gone. You should typically name a trustworthy executor to follow those instructions.
If your estate plan involves several trusts, your Will can act as a safety net for any assets that did not get placed in your trust before your death. Either way, it’s important to update your Will to reflect major life changes like marriages, divorces, births, and deaths in your family.
2) Revocable Living Trust
When you create a trust, you transfer assets you own to the trust itself and give it “ownership” over those assets. That process lets you pass property to your beneficiaries without having it go through the often lengthy and expensive probate process (and it often avoids taxation, too).
The trustee is a person you name to manage the property you transferred. Because the trust is revocable, you can change it as long as you are mentally competent.
3) Healthcare Power of Attorney
When you designate healthcare power of attorney, you give another individual (your “agent”) the legal authority to make important medical decisions on your behalf. This only happens in the event that you are incapacitated in some way.
Again, you should pick a person you trust to make the right decision — someone who understands your views and values. If you do not designate someone to handle these decisions for you, the government and legal system will choose someone for you. That person may or may not be the person you would have selected.
4) Financial Power of Attorney
Similar to the healthcare power of attorney, this document allows your agent to make financial decisions on your behalf. The difference is that with financial power of attorney, the agent you name will have the authority to manage assets you own or those you own jointly.
Your agent can make financial transactions, manage real estate, and handle several other financial and legal matters on your behalf.
5) Living Will
You can also create a document that directly instructs your physician or healthcare professionals about the types of medical procedures you want (or don’t want) to receive in extreme cases. If you are diagnosed with a terminal condition or become incapacitated in some way, a living will gives guidelines to your doctors and family members.
The instructions can include whether or not you want to receive life-sustaining procedures or other medical procedures that do not reflect your values.
There are dozens of other ways to customize your estate plan, but these five essentials should act as a foundation to ensure your wishes are met. If you have further questions about estate planning documents, contact the caring attorneys at Thomas-Walters Estate Planning. We will gladly walk you through your options and advise you on the best possible decisions.