The 5 Documents (Almost) Every Estate Plan Should Have

What exactly is an estate plan?

We get that question a lot.

The answer is “It depends.”

It depends a lot on what you need. There are some documents that everybody over the age of 18 benefits from preparing and there are documents that every parent should create to plan for their children. We explain the 5 documents that almost everybody should have in their estate plan.

The first 4 apply to pretty much anyone and everyone and form the foundation of just about every plan we do at Sage Legal.

The last item applies only to parents, which comprise a sizeable portion of our client base. As parents ourselves, we understand at Sage Legal how important it is to craft a plan that takes children into account.

1. A will

   Many people are familiar with the concept of a will. A will is a document that anyone over the age of 18 can execute to specify where their property will go when they die. A will also names an “executor” (also called a “personal representative”), who is the person designated to handle all of the decedent’s affairs, file with the probate court, gather all the assets, pay off any outstanding debts, and ultimately distribute assets. Assets owned in the name of a person when they pass must go through probate unless there is a valid beneficiary designation or other method of transferring those assets to their intended recipient. Aside from having a beneficiary designation, a trust is the primary method of transferring assets to someone else outside of the probate process. We will talk about the most common types of trusts, how they work, and whether you should be considering creating one in a separate blog post another day. Sometimes people say they don’t think they need a will because they “don’t really have anything,” but there are many reasons why executing a will is still important, such as the potential for having assets coming along at a later time unexpectedly or having a sizeable insurance payout in the event of an accidental death.

2. Health Care Proxy/Health Care Power of Attorney

   A health care proxy or health care power of attorney is often executed along with a “living will.” The former designates someone who can act on your behalf and make health care decisions for you in the event you are unable to do so yourself, whether it’s due to an accident or a debilitating illness that leaves you unable to communicate your wishes or competently make decisions. The latter is a document or section of the document where you lay out your personal wishes in the event certain medical situations occur. To over-simplify, this is where you can specifically lay out the situations in which you would want your agent to “pull the plug” or choose to keep you on life support for a period of time. These are difficult decisions to make for anybody, and clarifying your wishes in advance is not just important for you, but an incredibly loving act to perform for your family so they don’t have to guess about who should make decisions and what your wishes are.

3. Durable Power of Attorney

   This is often referred to as a “financial” power of attorney and it can be an incredibly powerful planning tool. A durable power of attorney (DPOA) can also be subject to abuse if given too freely to the wrong individual. The use and alleged mis-use of powers of attorney for aging parents often lead to high conflict situations among siblings. It is important to understand the implications of executing a power of attorney and choosing the designated POA wisely. Creating a system of accountability, checks and balances, and transparency can go a long way towards reducing or eliminating family conflicts. A DPOA typically gives broad authority to someone else to act on your behalf outside of a health care setting. DPOAs are commonly used with financial institutions and investment professionals in making decisions or taking action on behalf of someone else.

4. Final Disposition Instructions

   What kind of funeral and/or burial do you want? Do you even want a traditional service? Are you eligible for full military honors? Have you pre-purchased a cemetery plot or have a family burial ground available? These are all questions that should be answered and documented in a final disposition instructions form. If you have a non-family member who would potentially be making arrangements for you when you are gone, executing one of these can make that process much easier and potentially allow that person to skip the probate process of getting appointed prior to making your arrangements. If you have visions of a wild and crazy alternative celebration of life, this is a great place to lay that out, too.

5. Guardian Nomination

   This is the most important document high on the priority list for most parents of kids under 18. This document will answer the question of “Who will take care of my kids if I am no longer around?” It is a fairly simple document to prepare and execute, but it can provide a peace of mind that is unmatched in the world of estate planning documents. It can also create a lot of questions for many parents about who should serve as a guardian. We have lots of thoughts on this topic and are always open to sharing our tips and tricks we have accumulated over the years. If deciding who will actually be the guardian of your children if anything happens to you is a huge sticking point that is keeping you from getting your own plan done, absolutely reach out and book a complimentary Zoom session to talk through some ideas on the topic. We will be happy to meet you and share some tips on making your decision.

Whether you are a parent of kids under 18 or not, the first 4 documents on our list form the foundation for every plan we create. If you are interested in learning more about getting your own plan done, whether you need more than just the core foundation documents, or are just ready to take care of all of this already, the first place to start is a complimentary Zoom call to go over what your unique situation requires, what type of plan you need, and how much it will all cost. You can click here to find convenient online booking to get the ball rolling with your first call.