3 Estate Planning Documents Needed This Year – The Fool Motley

What do Aretha Franklin, Kurt Cobain and Prince have in common? In addition to being famous and talented, they are all dead without willpower. It's pretty amazing, since they all had money and lawyers to draft a proper estate plan, but for one reason or another, they did not elaborate it. Although the size of your estate is probably more modest than that of these dead stars, you should not neglect your succession plan.

Dying without a will creates several problems, mainly for your heirs. Without proper prior instructions, the court process called "probate" supports the distribution of your assets and the choice of a guardian for minor children, which can be problematic. For example, if the Probate Court places your children under unfit trusteeship or orders that your probate assets be directed to a son or daughter with a problem of dependency or financial management, problems may occur. . For these reasons and others, it is important to have an adequate succession plan.

Keep in mind that an estate plan can mean a wide range of planning ideas, depending on the complexity of your situation. For example, a married person with his or her third spouse having children from a previous marriage will require more planning than a single person. without children. Whatever your personal circumstances, you should consider writing these three crucial estate planning documents.

1. will

Where there is a will, there is a way to allocate your estate according to your intentions, not the vagaries of the Probate Court.

In simple terms, a will is a legal document that outlines your instructions on how your estate (money in bank accounts, holdings in brokerage accounts, cars, jewelry – usually holdings with no designated beneficiary, also called having money in your bank account). 39) to the people you choose. A will can dictate the amount and type of probate asset that each heir will receive in order to minimize family disputes after your death. These are different from non-qualifying assets such as an IRA, 401 (k), life insurance and a house if jointly designated, all of which go directly to the named beneficiary, outside of your will.

For people with children under a certain age, depending on your condition (18 or 21 years old), you can appoint guardians in your will to supervise their care. This is one of the main reasons why young families need a will. If you die without a will, the probate court has strict instructions to determine who becomes the guardian – usually the parents of the deceased, then the siblings, but it depends on your country of origin.

Appointing guardians in your will in advance will ensure that your children are brought up by the guardian of your choice, and not by the appointment of the court. Some couples find it hard to name guardians, unable to agree on who they should be, but keep in mind that the guardian is only brought in if the sky allows it, both the parents die. Understanding with your partner or co-parent to determine a plan for your kids that you can endure both of the stomach is much better than leaving it to the courts.

A will has other reasons: to make charitable bequests, to speed up the probate process, or to minimize inheritance taxes. For most of us, however, having an asset allocation plan and appointing tutors for your children is reason enough to make writing a will a top priority for this institution. year.

For those who already have a will in place, congratulations to you! Make sure distribution instructions and guardians, trustees and executors are up-to-date. The executors are the people in charge of the administration after the death, which consist of gathering your documents and presenting the will to the court of the estates. The trustees oversee all the money left in a trust for the heirs. When you write your will, you will select trustworthy people to serve as executors and trustees.

2. living will

A will takes effect after death, but a living will can take effect as long as you are alive. A Living Will is a written legal document indicating your wishes or instructions regarding medical treatment if you become unable to communicate your wishes. You state the medical treatments you would like and would not want to use to keep you alive, as well as dictate how long you would like to stay in the ICU.

Anyone who remembers the tragic case of Terri Schiavo understands the importance of a living will. On February 25, 1990, Terri Schiavo, 26, entered cardiac arrest and became comatose. She never recovered from her vegetative state and, after two years without improvement, her husband asked to be deprived of vital care. His parents opposed it and therefore started a legal battle in front of Terri's life in the media. Eventually, Schiavo's feeding tube was removed and she passed away on March 31, 2005. The heartache of deciding her fate illustrates the worst case scenario of what happens without a living will.

Having a living will eases the emotional burden on family members who have to make that difficult decision about whether to maintain life. There are no riddles or quarrels, your wishes being expressed in black and white. It may not be fun to think about death or vital need, but the memory of Terri Schiavo's trial is reason enough to add a will of life to your indispensable estate planning documents.

3. Power of attorney

The last of this dark but necessary list of estate planning documents is the power of attorney.

Imagine that you are incapacitated and stuck in the hospital in a state of inactivity. Who will pay your medical bills and mortgage? Who can sign papers on your behalf? As its name indicates, a Power of Attorney gives the person or representative your name the power to handle financial and legal matters on your behalf. Generally, it is a spouse or an adult child if you are not married.

Like any insurance, you must establish a power of attorney. before You need it. Otherwise, once you can no longer weigh yourself, your relatives may have to ask the court to obtain these powers, which takes time and money. There are "general" and "limited" proxies that give your representative powers, or only some of them, but it is best to talk to a lawyer about what might be right for you.

On the whole, estate planning may not be a topic for reflection, but you will be doing a huge favor to your heirs by taking the time to put these three legal documents in place.