Which Documents Should Be Included in Your Estate Plan?

An estate plan is beneficial for people of all ages, but as we age, the need for planning becomes even more crucial. Estate planning is often avoided by so many people because they do not want to think about the end of life, failing health, or disability.

Another common misconception is that an estate plan is only for rich people, but an estate plan is helpful for the senior adult and their families regardless of overall wealth.

An estate is all the property owned both individually and jointly, what is owed on that property, and includes bank accounts, real estate, jewelry, etc. Without having an estate plan, it is very challenging to carry out a person’s wishes and can unfortunately bring on long, drawn-out probate that can be very expensive for the family. By having an estate plan in place, it can provide peace of mind for the senior adult and their loved ones, as well as protection for the wishes of the senior.

Here are some basic guidelines for which documents should be included in an estate plan.

A living will outlines a senior’s wishes for end-of-life medical care. It can include what medical treatments the senior would or would not like to have in specific situations. A living will takes the stress of making those challenging decisions off of family members and helps to keep peace in families during times that can be emotional and complicated.

2. Advance Healthcare Directive 

An advance healthcare directive is an essential part of an estate plan. This legal document appoints someone to legally make healthcare decisions for a senior adult in effect for the senior if they become unable to make their own decisions. It often goes hand-in-hand with the living will described above.

3. Financial Power of Attorney

A financial power of attorney – often called a durable power of attorney – names an agent who has the power to act in the place of the senior or adult for matters relating to finances or legal obligations. This power can be designated to be immediate or conditional upon a later determination of incapacity. If it is designated as an immediate power, it is durable in the event of a subsequent incapacity such that the financial power of attorney stays in effect. By having a financial power of attorney in place, the stress and expense of a conservatorship can be avoided, and the senior has the final say in who will make decisions relating to finances.

4. Will

A will provides for an executor of the estate – someone who will take care of managing the estate, paying debts, and distributing property as specified by the person who wrote the will. The distribution of assets can be outlined in the will as broad or as detailed as a person wishes. In a will, it is important that beneficiaries and guardians for minor children be assigned. It may not seem necessary to discuss minor children when discussing seniors and estate planning, but with the rise of grandparents raising grandchildren, this may be an important part of the will. Additionally, a senior adult can spell out, in the will, how they want their funeral and burial to be carried out as well. Lastly, a will is still an important planning tool even if trust planning is involved. A will known as a “pour-over will” is necessary to act together with any revocable living trust that may be established.

5. Trust

Setting up a trust can be beneficial for the distribution of specific assets or pieces of property. One major benefit of a trust is that any assets held by the trust do not go through probate, as compared to a will. Property is still distributed at the death of the trust maker, but it is done without the need of a court. This also allows for the privacy of the trust maker. With only a will and probate, all of the deceased person’s assets and the terms of their will are made public.

There are also several other benefits that a trust can provide including asset protection for beneficiaries to protect inheritances from their personal liabilities. For example, trusts can provide for important tax planning to reduce the impact of a variety of types of taxes on beneficiaries such as estate and gift tax, capital gain tax, property tax, and inheritance tax.

Having an estate plan is necessary if you or your senior loved one wishes to have a say in what happens at the end of life and with assets after passing. Consulting and planning with an elder law attorney who is also an estate planning attorney will help to ensure that all options are explored, and the best possible solution is utilized. The elder law attorney can guide you through the necessary parts of the estate plan, explain them to you, and being to prepare the paperwork. This helps take any guesswork out of estate planning and allows everyone involved to be comfortable.

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