The 5 Estate Planning Documents You Need
January 24, 2023
By Anthony Lamb, J.D.
Senior V.P., Trust Officer & Senior Trust Counsel
By Karrie R. Hruska, J.D.
V.P. & Senior Trust Counsel
Trust and estate planning may not be the most pleasant topic to think about, but it’s one of the most important things you can do for yourself and your family. This series of documents serve as legally binding statements of your wishes regarding your estate, your loved ones, and your property and finances in the event of your death or incapacitation. Among their other benefits, these documents help your family avoid costly probate court proceedings that can result in money spent, time lost, and interpersonal conflicts.
There are a few misconceptions around the trust and estate planning process. The first is that it’s complicated; in fact, the process itself is quite simple, and it doesn’t require much time with the help of a financial or legal professional. The second misconception is that it’s only for the wealthy — everyone deserves to have peace of mind for what happens to their legacy, and there are no minimum standards you have to meet in order to create an estate plan.
Here are the five estate planning documents you should anticipate needing to protect your legacy:
Last Will and Testament
Central to the trust and estate planning process, your last will and testament reflects a number of wishes in the event of your passing. It identifies:
- Who will be the executor of your estate, which is the individual who oversees your estate affairs and ensures they’re carried out exactly as you intended;
- Beneficiaries of your assets, of which can include property, valuable items, money, and financial accounts;
- Guardianship designations for minor children and/or pets;
- And other significant decisions and stipulations that affect your estate.
Note: Some wills and testaments are limited by what they can legally include, depending on the state in which you reside. When planning this document, be sure to confirm whether beneficiary and guardianship designations can be clearly defined and included; if not, you may need to create separate documents to fully ensure your decisions are legally binding and followed exactly as you wish.
Living Will and/or Living Trust
A last will and testament only takes effect upon your death. But what happens to you and your wishes if you suffer incapacitation, or become faced with terminal illness? A living will legally reflects your decisions surrounding end-of-life care. It helps you gain peace of mind that your wishes will be carried out, and it keeps your family from having to make difficult, if not impossible, decisions on your behalf. It can outline your decisions about life-ending or life-sustaining procedures, palliative care, and organ donation, among others.
A living will may also accompany a living trust, which reflects your decisions about your estate and is managed by a successor trustee. This person manages your assets and affairs while you’re still alive and capable of making sound decisions. It’s another way to ensure a seamless transition of your assets to your beneficiaries when you pass. Upon your death, the trustee is required to follow the intentions you’ve communicated to them.
General Power of Attorney
When you designate a person as your power of attorney, you legally authorize them to make decisions on your behalf. These people are typically spouses, partners, or loved ones with whom you have a close relationship (they’re referred to as your “agent”). You can authorize them to oversee your estate, manage your finances, and make decisions related to your assets and property if you become medically incapable. Having a power of attorney prevents the courts from overseeing these decisions, which happens by default if you don’t have an agent who is authorized to do so.
Healthcare Power of Attorney
Similar to a general power of attorney, a healthcare power of attorney is legally authorized to make decisions on your behalf should you become incapacitated—the difference is they’re limited to decisions regarding your healthcare and medical conditions. This document assigns an agent, or proxy, who is legally bound to make health-related decisions when you cannot do so yourself.
There are many different forms of trusts that meet the specific needs of the trust-maker. The overall objective amongst all of them is to safeguard assets from your estate and disperse them to beneficiaries once certain conditions are met. In relation to the estate planning process, think of the trust as a legally binding “hold” on certain items, like money, valuables, and property. The trust-maker can determine who the beneficiary is, exactly what they receive, the terms they must meet in order to receive them, and instructions for taking ownership over the asset.
When it comes to protecting your legacy, the best time to begin making these decisions is now. Documents like these provide certainty and direction in the event of unexpected and unenviable circumstances. Our team of professionals can guide you through this process and answer any of your questions along the way.
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