When it comes to estate planning, there are several documents that are essential. The following list is a good starting point for determining what documents you need to create.
We’ll talk about 5 Estate Planning Documents in no specific order:
1. Wills and Trusts
The most important estate planning documents are the will and trust. These documents provide direction for your family after you die.
A will is a legal document that gives specific instructions to be followed after your death. It can also include marital property, life insurance policies, and business interests. A will may be written by you or your loved ones, a lawyer, or a notary public.
A trust is similar to a will in that it directs how property should be distributed after your death. The main difference between the two is that trust is established during your lifetime and can be altered with changes in circumstances such as marriage, divorce, or children’s birth or adoption.
Trusts set up a mechanism for managing an individual’s financial affairs during their lifetime and after their death. Trusts can be created for either individuals or businesses. They can provide protection from creditors, minimize taxes, distribute assets properly, and more.
2. Living Will
This document outlines what medical treatment you desire if you become seriously ill or injured. It can also be used as a reminder that you do not want to be kept alive through machines or other means that might prolong life without your consent.
- A living will document is a legal document that outlines your medical wishes, according to which you do not wish to receive life-sustaining treatment in the event of a medical emergency.
- A living will is not required, but it is highly encouraged by your physician and loved ones to ensure that you have a clear idea of how you want your affairs handled in the event of an incapacitating illness or injury.
- A living will be used for estate planning purposes if you have made arrangements for someone else to make decisions for you should you become incapacitated.
Any estate planning lawyer will tell you that it’s always recommended to have one.
3. Power of Attorney
A power of attorney document is a legal instrument that allows someone to act on your behalf in certain situations. It gives you the authority to do things on your own behalf, while also appointing another person to act in your place.
A power of attorney is a legal document that gives one person (the “attorney-in-fact”) the authority to act on behalf of another person (the principal), usually concerning financial matters. The attorney in fact can do almost anything that the principal could do, within the scope of their authority.
It is a legal instrument that enables one person, who is called the principal, to give another person, who is called the attorney-in-fact, certain powers to act on his behalf. A durable power of attorney (DPOA) is a document that gives you the right to make financial and health care decisions for yourself if you become incapacitated.
4. Durable Power of Attorney for Finances
A durable power of attorney document is an irrevocable document that lasts for as long as you want it to. You can also be named as an agent on this type of document, which means you can make decisions for yourself and appoint anyone else as your agent.
A durable power of attorney lasts for a lifetime or for a specified time. It allows you to name someone else to act on your behalf when you cannot, such as if you become incapacitated or die.
The main difference between a durable and an unlimited power of attorney is that with a limited power of attorney, the agent will only have the particular authority given to him by you during his lifetime. With unlimited power, he will have the same amount of authority after his death as he did when he was alive.
It allows individuals to appoint someone else as their agent or representative to make medical or financial decisions for them in the event of an emergency. DPOAs also allow individuals with disabilities to create individualized plans for themselves so that their family members and/or friends can take over their care if necessary.
The DPOA is an important part of estate planning because it gives individuals with disabilities control over their assets and health care decisions after they have become incapacitated due to illness or accident.
5. Last Will and Testament
This document helps to ensure that your wishes will be carried out after you die. It should include information about the distribution of your assets and how they will be distributed. You may also want to include provisions for your heirs so they know how they are supposed to act in your absence.
Wrapping up
The most important estate planning documents are the will and trust. The will is a legal document that is irrevocable, meaning that it cannot be changed or repealed by anyone. A trust is a legal document that is revocable, meaning that it can be altered at any time by the person who created it.
The trust allows for the transfer of assets from an individual to another individual or entity (trustee) without having to go through probate court. This is helpful when there are no heirs, children, or spouses left behind who would inherit from you after your death.
Apart from trusts and wills, however, there are a few other documents that are very important legally.
Whenever in doubt, keep in mind that a legal attorney from a reputable law firm such as Barr & Young attorneys can help you understand the complexities better.
