Estate planning isn’t just for the very wealthy or the very old. Estate planning is a very important process for everyone to participate in—regardless of age or financial status. It allows you to plan for what will happen to your minor children and hard-earned assets after you pass away. It is not easy or enjoyable to think about your own mortality, but death is inevitable. By planning ahead, you can make matters a lot easier for your family and loved ones. A well-designed estate plan will not only ensure your final wishes are carried out, but will also allow your family to grieve properly without having to worry about burdensome financial and legal red tape.
The design of and intention behind your estate plan will evolve throughout your lifetime. As our families grow and our assets change, so too do our concerns, goals, and desires. An estate plan for a 30-year-old will most likely look completely different than that of a 50- or 60-year-old. However, certain estate planning documents are foundational and everyone should have them, regardless of varying life circumstances.
When drafting your estate plan, there are five essential documents and tools that you should create alongside a qualified estate planning attorney:
A Will is probably the most well-known document when it comes to estate planning. It ensures that your financial resources and possessions will be inherited by the people you want to benefit from them. Without a proper Will in place, your assets will be distributed according to your state’s intestacy laws, which could mean that someone you are not close to (or, worse, someone you dislike) will inherit everything you worked a lifetime to accrue!
2. Beneficiary Designations
While this might not be considered an actual “document,” it is important to utilize beneficiary designations on certain financial accounts and insurance policies. By using beneficiary designations, 401(k) accounts, pensions, and life insurance policies can be transferred directly to a beneficiary after you die, rather than be subjected to a potentially costly and time-consuming probate process. In order to avoid the court distributing these items per state law, you must contact each eligible institution and name a beneficiary for the account.
3. Durable General Power of Attorneys
Estate planning is not just about what happens when you pass away. It also pertains to any circumstances which might make it difficult for you to care for yourself while still alive. A durable general power of attorney appoints a person to make financial decisions and handle your affairs for you if you become mentally or physically disabled. This person can access your bank accounts to pay your bills, conduct real estate transactions, and otherwise manage your finances.
4. Health Care Power of Attorney & Living Will
These documents have many different names depending on the state you live in: medical directives, advance directive, health care power of attorney, healthcare directive, health directive, living will, etc. There are slight nuances to each, but essentially, these documents allow you to state your preferences for medical care in case you are unable to communicate due to an injury or illness.
A health care power of attorney grants a named agent permission to make medical decisions for you in the event you are incapacitated or otherwise unable to make decisions for yourself.
A living will spells out your wishes for end-of-life care, for example, if you do or do not want to be placed on a ventilator or feeding tube, etc., so that your doctors and loved ones will know what you would want if you are unable to express your desires at that time.
5. HIPAA Authorization
This is a simple legal document that ensures your medical information can be disclosed to a trusted family member or friend.
Contact Empowered Legacy Planning
Estate planning goes beyond just these documents, but these are the “must-haves” for every adult (yes, even you). Due to the complexities and unique situations of each estate, it is best to contact an attorney to assist you with your plan. An estate planning attorney will ensure that all of your wishes are met and that the proper documents are in place.
Empowered Legacy Planning is here to help you design an estate plan that works and ensures your final wishes will be carried out when the time comes. Contact us using the form below to get started with estate planning or to update an existing estate plan.
When you’re ready to begin making your estate plan in earnest, contact Empowered Legacy Planning. We empower individuals and families to take control of their legacies through estate planning. Contact us today to start planning your estate!