One of the most valuable gifts you can leave your loved ones is a properly prepared estate plan. During your lifetime you will have worked hard to acquire various assets (hopefully) and when you leave this earth, the choice is yours about who/what gets those assets. However, this won’t happen without the proper planning. Don’t leave it to the state to make decisions about what happens to your assets upon your death. The first thing you should do is touch base with an estate planning attorney, as they will be well versed in the legal requirements for the state in which you reside.
Here are 5 estate planning documents that you should familiarize yourself with:
1. Last Will and Testament – a will is a legal document which allows you to:
- Designate who will receive your assets after your death; this avoids having your assets divided according to the state’s formula
- Nominate an executor; they will manage your estate, pay your expenses, debts, taxes and distribute your estate according to the instructions in your will
- Nominate a guardian for your minor children
2. Durable Power of Attorney for Health Care
- With this document, you name a person of your choice, and who has agreed, to make medical decision for you and to act in your behalf in health care matters is you are unable to make those decisions. This authority expires upon your death
3. Revocable Living Trust
- In a revocable living trust, your assets are transferred into a trust, generally administered by you for your benefit during your lifetime and transferred to your beneficiaries upon your death, without the need for court involvement. Your Last Will and Testament, which is supplemental to your trust, covers any assets that have not been transferred into the living trust. A revocable trust allows you to retain control of your assets during your lifetime, quickly transfer them to your beneficiary upon your death and avoid the expense and delay of Probate Court. This trust also helps to reduce or eliminate any federal estate taxes.
4. Durable Power of Attorney for Property Management
- This document designates and authorizes a person of your choosing to make financial decisions and manage your assets on your behalf to the same extent and effect as if you were present in person. Durable means that they may also act for your in the event you become incompetent or incapacitated.
5. Living Will
- A living will allows you to state your desires regarding the use of life-support devices to prolong your life in the event you are stricken with a terminal illness or when there is no reasonable hope for recovery from an injury or illness.