In the movies, estate planning consisted of the stereotypical reading of one document, with a feeling of foreboding and a heavy voice reading the will. In reality, however, estate planning is about more than spelling out who gets your good china; an estate plan consists of a collection of documents that can speak for you when you physically can’t. Everyone’s estate plan is different based on their circumstances, but there are a few essential documents that should be included—but not limited to. Ask your attorney for the specific legal documents necessary to your situation.
Many think of a will as a catch-all document with stipulations for almost any situation; actually, a will’s only purpose is to dictate the distribution of your assets when you die. This is done by an executor who is named in your will. Your executor carries out all your stipulations and settle your affairs, so choose this party carefully (and follow these other tips for a solid will).
A will contains a list all your assets, a guardian for any minors in your care (if applicable), and list of beneficiaries of your assets (people or organizations that receive items or funds). After your death, your will is subject to probate, which is the legal proving of the will. Probate can take anywhere from a few months to a year.
Power of Attorney
Your Power of Attorney document spells out the party (any friend, relative, spouse, etc.) who is responsible for all your legal and financial matters if you can’t. Choose this person carefully; he or she can invest and use your funds for (almost) whatever purpose they deem necessary. Even if you have a living trust, a Power of Attorney is still needed for anything not included in your trust. Your Power of Attorney is in effect until your death.
If you do not have a Power of Attorney in place, a court-appointed guardian or conservator is appointed. This option can be expensive and complex.
Healthcare Power of Attorney
A Healthcare Power of Attorney document serves the same purpose as the Power of Attorney, only in a more limited scope. Your Healthcare Power of Attorney acts on your behalf while you are incapacitated, but only on healthcare decisions. An advanced medical directive, a companion document, is also helpful to fill out detailing your wishes, such as whether you want to be placed on a ventilator.
Depending on your situation, your attorney may also suggest other legal estate planning documents, such as a living trust. In addition to legal estate planning documents, consider filling out funeral planning documents so your wishes are known to your family and friends.