Essential Estate Planning Documents
If we’re honest none of us really know what we’re doing from day to day during this Covid-19 crisis. Everyday I learn something new, how to Zoom, how to make sure my kids are working on online learning and not surfing the web watching the 1,000th Dude Perfect video (parents of pre-teens and young teens will know what I’m talking about.) We aren’t sure about much right now. We can’t know how long this virus will attack our country, how it will effect our economy, or if we, or any of our loved ones will get it. Today, I’m not going to focus on the unknowns rather I’m going to talk about what I do know. Some things don’t change during crisis, and often it’s the things about which we have assurance that bring us comfort, strength and peace. For instance, I do know if something happens to me and my husband, people who love my minor children will care for them and my children will have money managed by a person who knows how to manage money, and will spend it on my children in a way that matches my values and will help shape my kids into the people I want them to be. Of course, being an estate planning attorney, I’m talking about having an estate plan.
What is an estate plan? In order to understand estate planning you first must understand what constitutes an “estate.” An estate encompasses your net worth, in other words, all of your assets, including money and real estate, minus your debt.
What do estate planning attorneys do? There are many facets of estate planning and different specialties inside the umbrella of Estate Planning, but in general terms, estate planning attorneys do the following:
- Estate planning attorneys help you ensure that at your death, your assets transfer in the manner you wish, to whom you wish, in the most efficient and economical way possible. Children aren’t considered a part of our net worth as they are priceless, yet estate planning also encompasses nominating a Guardian for your children in the event of your death.
- Estate Planning attorneys help you establish decision makers for you in the event you are incapacitated. For instance, if you are in a coma, and can’t make financial or healthcare decisions for yourself, estate planning attorneys can put documents in place that legally establishes those decision makers.
What estate planning documents do I need? Like all good lawyers, I will tell you, “It depends.” Everyone has different financial and family situations that require different plans. For instance the plan one might have with two young children and net worth of say, $500,000.00, will look vastly different than someone who has no children, lives on social security, and has very little in assets. The following are common documents that are utilized generally in estate planning.
Financial Durable Power of Attorney- This document appoints a person to manage assets and what I like to call the “overhead” of life. For instance, if you are in a coma or had a stroke or dementia, this document establishes who will be able to pay your bills and make financial decisions for you, amongst other things. Who needs this? Everyone over the age of 18.
Durable Power of Attorney for Healthcare Decisions- This document appoints the person of your choosing to make healthcare decisions for you if you are unable to do so. Who needs this? Everyone over the age of 18.
Advanced Healthcare Directive- People commonly refer to this document as a “Living Will.” An Advanced Healthcare Directive lets your family, decision makers, and medical professionals know what you would want regarding end of life decisions if you are not able to make those decisions for yourself. Who needs this? Everyone over the age of 18.
Last Will and Testament- The most common misunderstanding about a Last Will and Testament is that a Will keeps your estate out of probate. A Will rather instructs the probate court on what to do with your assets and your minor children upon your death. Who needs this? Most everyone over the age of 18.
Revocable Living Trust- A revocable living trust, while not necessary for everyone, takes ownership of your assets (not your children!) during your life or upon your death and manages them according to the directions in that Trust. Who needs this? Some people, not everyone.
So what documents do you need? Answering this question involves sitting down with your attorney and having a conversation. Mostly likely it will involve the dreaded filling out of forms, but I assure you, having the correct documents in place specific to you and your family situation, will save your family and friends much stress in the event of crisis.
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