Estate planning is not what is talked about much as no one wants to imagine their death, but we all know that it is something that can’t be escaped. While we spend our whole life in accumulating wealth to secure our loved ones, we would definitely want them to be secured after our death. Hence, it’s better to plan your estate ahead of time so that you won’t regret later in the long run and your family won’t have to suffer when you are not around.
Irrespective of your age and value of your estate, you must plan it. Estate planning is not only meant for the property distribution after your demise but it is also to plan for the unexpected situations like if you ever become disable to decide for yourself and your estate due to mental or physical incapacity.
Despite being a complex process, in order to have a successful estate plan, you need to have the below listed important documents that are required while estate planning:
6 Must Have Documents on Your Estate Planning-
1. Last Will or a revocable trust: The first and foremost document required while estate planning to specify that how would you distribute your property after your demise. A will also designate an executor who is obligated under the state law to estimate and dispense your assets as mentioned by you in the will while paying your taxes and settling your debts. Apart from your representative, you can also appoint a custodian for your children in case they are minor and for the pets as well to ensure that they are being taken care of by your chosen ones in your chosen way.
A revocable trust allows you to specify how your assets will be handled in case of your incapacity or demise while avoiding probate. You need to put your property in a trust, be the trustee and name successor for you to manage the financial and medical affairs in the event of your incapacity and death. Revocable trusts are quite complex as you have many options to structure your trust and determine the future of your family and property after your demise.
2. Living Will: A living will, also called a health care proxy, specifies what type of medical treatment should be given to you in case of a dire medical situation. It comprises end-of-life guidelines that specify the level of disability you’d be willing to live with, the type of life-sustaining treatment to be provided to you, and in what way would you like to end your life if there is no hope of recovery for you.
3. An advance health care directive: This document helps you to designate a person to take care of your health-related decisions if you ever are incapable to do so due to your incapacity caused by an accident or severe illness. One must ensure that you have your HIPPA (Health Insurance Portability and Accountability Act) authorization to your appointed person so that they can access your medical records.
4. A durable financial power of attorney: Through this document, you can permit a person(s) to handle your financial affairs when you are incapacitated. In case you don’t have this document, then your finances get disordered, your bills and taxes going unpaid and thus it will become burdensome for your family as then the court will decide a conservator in such a case which will waste time and money. A durable power of attorney is advised as it becomes effective as soon as you sign it and will manage your finance when you are unable to do that.
5. Letter of Intent: Also known as a letter of instruction, is a simple document that you left for your representatives like an executor or a beneficiary. It specifies your representatives about every detail to help them administrate your assets after your demise. It will help the appointed people to identify the location of legal documents and instructions for them to fulfill your wishes in your chosen way. You can also instruct your funeral details or other special requests in the letter of instruction.
6. Asset beneficiary designation: Every individual owns some assets that can pass to your heirs without a will such as life insurance policies, bank account, retirement account, etc. Hence, it is required that you must update the documents of such assets carefully as per your choice. It is advised to designate at least 2 people as beneficiaries to avoid the case in which the beneficiary might also get deceased. Also, the beneficiaries should be more than the age of 21 and mentally fit to avoid the involvement of the court.
There is much more in estate planning apart from dispensing the property, hence you must have the aforementioned documents ready to live a peaceful and relaxed life without worrying about your assets’ and loved ones’ safety and security.