Everyone has heard they need an estate plan. Most people know it should include a Last Will & Testament, but when pressed, don’t know what other documents might be required. An estate plan is more than just a Last Will & Testament. A good estate plan should not only dispose of your property at death, but should ensure you can have assistance if you lose your capacity to manage your affairs before you die.
A basic estate plan should include the following written documents:
1. Last Will & Testament a/k/a Will. This is the document in which you direct the disposition of your property at your death and designate who will be in charge of your affairs after your death. Every state has specific requirements regarding the creation and execution of a Will.
2. Health Care Advance Directives a/k/a Living Will and Health Care Proxy or Surrogate Designation. These are the documents in which you specify your end-of-life care instructions, outline any specific health care you do or do not want in the event you are unable to make health care decisions for yourself due to temporary or permanent incapacity, and designate another person to make health care decisions for you in the event you are incapable of making them yourself. While most states recognize validly executed Advance Directives from another state, each state has its own requirements regarding who can create, sign and witness these documents. A widely used form that is accepted in many states is the Five Wishes form, which is available through Aging with Dignity, “a national non-profit organization with a mission to affirm and safeguard the human dignity of individuals as they age and to promote better care for those near the end of life”.
3. Durable Power of Attorney. This is a document in which you grant someone (referred to as an agent) the authority to make financial and legal decisions for you. In some states, you can condition the agent’s ability to act on your incapacity; while in other states, like Florida, the agent has the authority to act once the document is signed. Every state has specific laws governing the authority that can be granted with a power of attorney, who can serve as an agent, and how the document must be signed and witnessed. If the power of attorney fails to meet the state’s requirements, it may not be valid.
4. Beneficiary Designation. If you have life insurance, annuities, or certain types of retirement accounts, you must be sure you have completed the necessary beneficiary designatation forms to ensure the funds pass to the individual you choose instead of passing pursuant to the financial institution or insurance company policy applicable to the funds.
Additional documents, such as a trust, may be necessary, depending on your family’s circumstances, the value of your assets, and the health of you and your family. For information about how to create an effective estate plan for you and your family, speak to an attorney.