To ensure your future and the future of your family, it’s vital that you engage in estate planning. Estate planning not only involves the ways in which your money will be distributed after you die, but whether or not you receive lifesaving medical care, and more.
There are quite a few documents involved in the estate planning process. However, five of them stand out among the rest. Without further ado, here are the five most important estate planning documents.
1. Last Will and Testament.
The Last Will and Testament is arguably the most important of all estate planning documents. This document species to where a deceased individual’s assets will go. It ensures that the individual’s family and friends are set up for the future financially.
Named within a will is the Personal Representative (the person who manages the will), the beneficiaries (those who will be receiving assets upon the filer’s death), and the guardians (those who will assume guardianship of the deceased individual’s minor children, if there are any).
A will should contain information on where the deceased individual’s assets are going.
And this is not just for money. Possessions can be passed down as well, not to mention real estate. If you own something, regardless of what it is, you can distribute it to your beneficiaries through a will.
Another function of the legal will is to direct how your debts will be paid. This not only helps to account for every dollar that you own but it also assists your loved ones in handling your finances after you’re deceased.
Note, a legal will does not prevent an estate from going to probate court. However, it can help to reduce the length of the probate process. In other words, it can help to get funds distributed as quickly as possible, which can be highly beneficial when it comes to paying for funeral expenses and the like.
2. Living Will
Next, we’ll discuss the living will. This is a will that designates the types of medical treatment you’ll receive in the event that you’re rendered unconscious.
A living will serves to indicate whether you want to donate your organs, be resuscitated in certain situations, be put into palliative care, and more. It leaves no doubt about the type of treatment you would like, thus taking a tremendous strain off of your loved ones when end-of-life decisions need to be made.
If you don’t have a living will, your loved ones will have to decide treatment for you. Not only is this a huge responsibility that can wear a person down emotionally but it can also create feuds between family members. For instance, if one person wants to resuscitate you and another doesn’t, a long-standing fallout could occur.
3. Financial Power of Attorney
Financial power of attorney is a document that enables you to assign someone else as the manager of your finances in the event that you become incapacitated or begin to suffer memory loss. In essence, it helps to ensure that good decisions are being made with your money.
Within a financial power of attorney, you will name someone that you trust to be the future manager of your assets. This person is usually a spouse, a sibling, or an adult child. Note, though, that you can name anyone you’d like, including a close and trustworthy friend.
If you don’t file a financial power of attorney, your money could be left vulnerable. Not only could you mismanage it while in an incoherent state, but those close to you could spend it without any regulation or resistance.
4. Medical Power of Attorney
Similar to the financial power of attorney is the medical power of attorney. However, instead of granting financial management capabilities, this document grants medical management capabilities. In short, it names a person who is allowed to make medical decisions for you in the event that you become incapacitated.
A medical power of attorney is usually filed in tandem with a living will, of they can be in the same document, as they both involve the management of your medical treatment. The person you name in your medical power of attorney will speak up on behalf of your living will and make any decisions that are not covered within it.
The medical power of attorney is usually granted to a family member, such as a spouse or an adult child. Again, however, like the financial power of attorney, it can be granted to anyone.
The last document we’re going to discuss is the trust. A trust is essentially a financial account into which you can pass your assets over time. It’s not subject to probate court and will ensure that your assets remain private after your death (the same is not true of assets passed through a will).
When it comes to estate planning, there are two primary types of trusts: revocable living trusts and irrevocable trusts. An attorney can discuss the differences with you.
These Estate Planning Documents Can Have a Large Effect on You and Your Family’s Future
When it comes to estate planning documents, none are as important as the ones discussed above. These documents cover the estate planning basics and create a good foundation for you and your family’s future. Establishing these documents is an absolute necessity.
Need an estate planning guide? If so, and if you’re in the Watertown or Lake Mills, Wisconsin areas, the lawyers here with Neuberger, Griggs, Sweet & Froehle can help.
Contact us today for a consultation!