Woody Allen once said, “I’m not afraid of death, I just don’t want to be there when it happens!” Estate planning is not an easy topic since it involves planning for your death. Even though it is a sensitive subject, careful planning steps should still be taken. Many people wonder about which documents they should use. So let’s take a look at some key estate planning documents that everyone should consider:
Durable power of attorney
A durable power of attorney (DPOA) helps protect your property if you become physically unable or mentally incompetent to handle financial affairs.
A DPOA authorizes someone else to act on your behalf, so they can do things like pay routine expenses, collect benefits, watch over your investments, and file taxes.
Advanced medical directives
Advanced medical directives explain what medical treatment you would want if you can't communicate your wishes yourself. Examples of advanced medical directives include a living will, durable power of attorney for health care (sometimes called a health care proxy), and a Do Not Resuscitate (DNR) order. Each has a different use and is created by a licensed attorney.
Letter of instruction
This is a non-legal document used to express your miscellaneous thoughts and wishes regarding your estate. This can be a very helpful document to leave your family and your executor.
Since it is private, you get a chance to say things you would rather not make public.
Also it is NOT a legal document and not enforceable. But your personal wishes, though not legally enforceable, still carry a lot of weight. Besides, how do your heirs know that you won’t come back and haunt them?!!
A living trust is a legal entity you create to own property, such as your home or investments. The trust is revocable while you’re alive and becomes irrevocable at death. You control the property in the trust, and, whenever you wish, you can change the trust terms, transfer property in and out of the trust, or end the trust altogether.
The primary function is usually to avoid probate since property in a living trust is not included in the probate estate.
The main purpose of a will is to disburse probated property to heirs after your death. Probate takes time, is not private, is costly and can cause headaches with assets like closely held business interests and investment portfolios. Since a will transfers property exposed to probate, you can reduce your probate exposure by titling assets properly. Such as in a revocable living trust, or by beneficiary form or joint tenants with survivorship.
Proper estate planning can go a long way in accomplishing your objectives. So if you have not created an estate plan we strongly recommend doing so. Please contact us if you have any questions.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.