Estate planning is one of the most important things you will do in your life, however, many people put off estate planning because they are unsure what documents they will need, they believe that they don’t have sufficient assets to warrant the preparation of estate planning documents, or they feel as if they cannot afford the legal costs involved. The good news is that it is never too early or late to start estate planning. Even those individuals with little assets (and especially minor children) should have basic estate planning documents; documents that can be prepared by a trusted attorney for a reasonable fee. What follows is a brief introduction of basic estate planning documents.
- A Basic Last Will and Testament. A Last Will and Testament allows you to decide who receives your property and who manages your estate. A Last Will and Testament also allows you to name a guardian for any minor children. A Last Will and Testament may be the most important legal document you ever sign. Without a Last Will and Testament a court may decide who receives your property and cares for your minor children. A Last Will and Testament does not control the disposition of many of your assets. For instance, a Last Will and Testament usually does not govern the disposition of insurance benefits, pension benefits, 401(k) benefits, or assets held jointly with your spouse or others, therefore it is important to ensure that you coordinate the beneficiaries of these benefits with those in your Last Will and Testament.
- A Living Will and Healthcare Power of Attorney. A Living Will allows you to make important health care decisions for yourself, in advance. It is important to state your wishes ahead of time because it reduces the potential for conflict amongst family members and spares your loved ones from making difficult end of life choices. A Healthcare Power of Attorney allows another person to make medical decisions on your behalf. A Healthcare Power of Attorney can also serve as a legal “back-up” in the event that a hospital will not honor your wishes stated in your living will.
- A General Power of Attorney. A general Power of Attorney allows you to appoint someone to make financial and non-medical decisions on your behalf. A Durable Power of Attorney immediately grants power of attorney and remains in effect even if you become mentally incapacitated. A “Springing” Power of Attorney only goes into effect if a doctor certifies that you have become incapacitated. This type of Power of Attorney allows you to keep control over your affairs unless you become incapacitated.