You probably don’t want to think about the possibility that you could become seriously ill or pass away but planning for the worst is essential. The legal documents that make up the estate planning process allow you to make sure your wishes are followed if you’re alive but unable to make or communicate decisions for yourself and after you pass away.
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It’s important to put your wishes in writing now to make things easier on your loved ones later.
Overview of Forms and Tools
Estate planning involves deciding how to manage your financial affairs and health care in the event of your incapacity and what to do with your assets upon your death. You can leave your own instructions and choose other people to make decisions on your behalf.
In most cases, you can create your own proper estate planning documents without paying expensive fees for legal advice, but it’s helpful to start by familiarizing yourself with some of the most common estate planning tools and forms. In this article, you will find an overview of the following estate planning documents:
- Last Will and Testament
- Health Care Directive and Living will
- Financial Power of Attorney
Contents of a Basic Will
There are basic elements that pretty much every will contains. A will should begin by making it clear that it’s meant to be a will. It needs to include the full name and residence of the decedent or testator (the person who is making the will). It should also include a clear revocation if you have made any previous wills.
Wills direct the distribution of your estate according to your wishes. It can contain specific gifts of real estate and personal property to your beneficiaries. You can also appoint a guardian for any minor children and a caretaker for any pets. A will should also designate an executor or personal representative to handle the administration of your estate. It’s usually a good idea to include an alternate or successor executor as a backup in case your first-choice declines or is otherwise unable to serve.
You may also be wondering about whether or not you should create a trust. This is often used by parents who want to provide support to their minor or special needs children. There are many different types of trusts, such as revocable living trusts, irrevocable trusts, AB trusts, inter-vivos trusts, living trusts, and testamentary trusts. The person creating the trust is called the grantor, who designates a trustee responsible for managing the terms of the trust and trust assets. The trustee also carries out the distribution of assets to any beneficiary designations pursuant to the trust.
While wills contain the same basic elements, states may have their own requirements for creating an enforceable legal document. FindLaw’s last will and testament templates are state-specific and include instructions for signing and finalizing your will according to your state law. Having a valid will in place can make it easier to manage gift taxes, estate taxes, and other tax laws or probate process issues for a surviving spouse or others you care about and are leaving behind.
Basic Living Will or Health Care Directive
As people start to age, they think more about what would happen if they became ill or otherwise incapacitated and could no longer communicate their decisions about medical care. These concerns can be addressed by preparing a health care directive and living will or health care power of attorney. You can state your preferences for end-of-life health care and name someone to make medical decisions for you if you are unable to do so yourself, like a relative or close family friend. Married couples often choose their spouse. Depending on the state in which you live, a health care directive and living will might be called an “advanced directive,” “medical power of attorney,” “declaration regarding life-sustaining treatment,” or some other similar term.
Many people choose to combine a living will and power of attorney for health care into a two-part health care directive containing:
- Instructions to guide your attending physician and other health care providers
- Designation of a health care agent
FindLaw’s estate planning tools automatically generate the appropriate health care directive and living will forms when you choose your state of residence. You are able to provide instructions for the medical treatment you want or do want to receive and name someone to carry out your instructions and make health care decisions on your behalf.
Financial Power of Attorney
Along with worrying about medical treatment as they get older, many people also start thinking about how their financial affairs would be managed if they couldn’t speak for themselves. With a financial power of attorney, you (the “principal”) can designate someone (an “agent” or “attorney-in-fact”) to make financial decisions on your behalf if you become incapacitated and are unable to make those decisions yourself. Some of the powers you can grant your agent include:
- Manage retirement plans and annuities
- Oversee life insurance and other types of insurance policies
- Transfer assets and file income taxes
- Manage bank accounts and real property
You can set limits and exemptions on your agent’s power so it’s important to think about the types of things you want your agent to be able to do. You can also choose when to make your power of attorney effective. If you make a durable power of attorney, your agent’s authority is always there. If you don’t make it durable, your agent will have the authority to make financial decisions during your incapacity, but it will end if you recover. This means that if you again become incapacitated, your agent no longer has the authority to act on your behalf because their power ended upon your previous recovery.
FindLaw’s financial power of attorney explains each of the powers you can give your agent and when your agent’s authority takes effect. Like the last will and testament and health care directive forms, the financial power of attorney complies with the requirements in your state.
Drafting Your Estate Plan
Our estate planning documents are here to assist you in accomplishing your goals without the cost that comes with time-consuming estate planning attorneys. The simple questionnaire allows you to create an estate plan that’s perfect for you and your family members. Get peace of mind by taking care of tomorrow’s problems today.