Estate planning is a complicated process that goes beyond simply drafting a will. It involves ensuring your wishes are fully honored after your passing or in the event of incapacity, protecting your assets from creditors, risks, and lawsuits, and employing strategies to minimize taxes for you and your heirs. The following are key estate planning documents that you should consider implementing.
Last Will
A last will is an essential estate planning document because it clearly defines your final wishes. It allows you to specify who will inherit your assets, designate guardians for dependent children, and outline the allocation of cash, real estate, and heirlooms. Simply put, this legal document gives you control over the distribution of your estate after your passing. Without a will, the government decides how your assets get distributed, which may not align with your desires.
Revocable Living Trust
A revocable living trust is a legally enforceable document that outlines a plan for managing your affairs during your lifetime or if you become incapacitated and specifies how your assets will be distributed after your death. It works in conjunction with a will. As the trust maker, you retain the right to change, dissolve, or revoke the trust at any time. As long as you serve as your own trustee, no additional tax filings are required, and all income from the trust will be reported directly on your personal tax return. Upon death, the trust becomes irrevocable, and a successor trustee carries out your final wishes.
Living trusts offer certain advantages over wills. One of the main advantages is that the details of your estate remain private, and the assets in the trust avoid probate, a potentially lengthy and costly process.
Durable Power of Attorney
A durable power of attorney allows you to appoint a person to make financial and medical decisions. Unlike a power of attorney, which ends when a person becomes incapacitated, a durable power of attorney remains in effect if you become incapacitated and cannot make decisions on your own. The appointed agent can handle tasks such as paying bills, maintaining your mortgage, selling real estate, and overseeing investments. Without this document, no one can make these decisions on your behalf unless a court appoints a guardian, which can be a lengthy and extremely costly process that may not result in your preferred choice.
Healthcare Surrogate
If you become incapacitated and cannot make medical decisions, an advance healthcare directive for a healthcare surrogate ensures your last wishes are honored. While making these decisions can be difficult and uncomfortable, this legal document designates someone to make medical choices on your behalf. It also outlines specific instructions for your medical care, including preferences regarding life-sustaining treatment if you are permanently unconscious or terminally ill.
Pre-need Guardian Designation
Did you know that if you fail to name someone to act on your behalf, the court could appoint someone you have never met to make critical medical and financial decisions for you, including care for your minor children? A pre-need guardian designation allows you to appoint a trusted individual to act on your behalf and work alongside a durable power of attorney and a healthcare surrogate. A guardianship designation ensures that someone will care for your minor children in case of incapacity.
Letter of Instruction
A letter of instruction, or letter of intent, is a document where you can list important documents and their locations, outline your wishes for funeral arrangements and pet care, and identify key professionals you work with. While not legally binding, it is a personal guide to convey specific wishes to your loved ones and trustee/personal representative after your death. This is not a separate document but is done in conjunction with a retirement plan, annuity, or life insurance policy.
List of Important Documents
Ensure your family can find the estate planning documents needed to settle your affairs. Creating a list of these documents and their locations will help your loved ones carry out your final wishes more easily.
Key documents include:
Bank Accounts
Life Insurance Policies
Birth certificates
Real Estate Deeds
Retirement Accounts
You can also include provisions for your digital assets in your estate plan. Digital assets may include:
Website Domain Names
Electronically Stored Videos and Photos
Social Media Accounts
Email Accounts
Without including digital assets in your estate plan, loved ones may have difficulty accessing your social media, photos, emails, and other digital items after your death.
Estate Planning Advisory Experts
With over 66 years of leadership, experience, and expertise, our talented team of CPAs and advisors fully understand the nuances of estate planning. In today’s ever-changing economic landscape, we offer resources beyond the traditional audit, accounting, and tax services. We can assist you in developing a robust estate plan that streamlines the process, minimizes tax liabilities, and ensures your assets are distributed according to your wishes. We will work with your attorney to draft the legal documents required to implement the plan, providing peace of mind for you and your loved ones across generations.
Here to Help with Your Estate Planning Documents
If you have questions about your unique situation or need strategic financial advice, we are here to help you on this journey of charting your legacy. Contact us to let us know how we can best support you.