Estate Planning Documents Everyone Should Have


The depth of your estate plan will hinge on the complexity of your unique situation, but generally speaking there are 5 estate planning documents that everyone should have:

  1. A living will
  2. A healthcare power of attorney
  3. A durable power of attorney
  4. A letter of intent
  5. A last will and testament

Living Will

A living will, also known as an advance health care directive, gives you the opportunity to voice your preferences regarding end-of-life medical treatment. This document will only be used if you are medically incapacitated and unable to communicate your decisions. A living will can broadly authorize the doctors to do everything they can to extend your life in emergency circumstances, or it can include a do-not-resuscitate (DNR) directive if you are against life-sustaining procedures. A living will can be updated or replaced at any time if your preferences change, and it should be reviewed every 3-5 years to ensure it is always up-to-date. The document only provides instructions during your lifetime, and therefore has no efficacy after your death.

Healthcare Power of Attorney

In addition to drafting a living will, it’s also wise to draft a healthcare power of attorney. This document, sometimes referred to as a health care directive or proxy, grants an individual of your choice the power to make important healthcare decisions on your behalf if you are unable to communicate your desires. The individual you choose as healthcare proxy is legally bound to abide by the directions in your living will. While having both documents may seem redundant, it will ensure that your loved ones are not left unprepared for any unexpected circumstances. Not only will they know your preferences, but there will be a trusted family member who can make important decisions for you in urgent, time-sensitive situations.

Durable Power of Attorney

Similarly, you’ll want to give a trusted individual the authority to make important legal and financial decisions should you become incapacitated. This person, usually an adult child or next-of-kin, can be granted full control over your assets (to buy, sell, invest, gift, etc.) or they can be granted limited access over select assets (for example, they can only control your banking and brokerage accounts). The power of attorney can take effect immediately or upon your death, but the document can only be drafted while you still possess legal capacity. If someone contests the power of attorney and the court finds that you were mentally unfit at the time the document was signed, it will be invalidated, so it’s important to take care of this (and all of the estate planning documents, for that matter) while you are mentally fit to do so.

In the absence of a power of attorney, a court-supervised conservator or guardian will be appointed to manage your assets should you become incapacitated. If you die without a power of attorney, only the court-appointed executor or administrator will be able to direct your assets.

Letter of Intent

A letter of intent can spell out any directions to your executor or beneficiaries (such as what to do with certain heirlooms or collectibles), but in the context of this conversation its primary usefulness is to indicate your requests for your funeral and burial. These instructions can be included in your last will and testament, but oftentimes your will may not be opened until days or weeks after your death, meaning your loved ones won’t know your requests until after the funeral. Leaving a letter of intent with one of your loved ones will ensure that they know what your preferences are, and how you intend to pay for it.

Last Will and Testament

The primary purpose of a last will and testament is to direct how your assets will be transferred when you die. It’s taken you a lifetime to accumulate your property and possessions, so it’s worth the time and consideration to write down how they will be passed on to your heirs. The individuals (and organizations) who are to receive your assets are known as beneficiaries; they can be family, friends, business partners, charities, trusts, and anyone else to whom you’d like to gift assets.

Note that your will can only direct assets that are subject to probate, such as individual bank accounts and brokerage accounts, personal property (cars, jewelry, collectibles, etc.), and real property titled individually or held as tenants in common. Non-probate assets—such as retirement accounts, life insurance death benefits, accounts with transfer-on-death (TOD) or payable-on-death (POD) beneficiaries, and assets held in joint tenancy—will all transfer to your intended beneficiaries outside of probate, and therefore don’t need to be addressed in your will.

If you have any minor children, you’ll want to nominate a guardian for them in your will. It’s also wise to consider the manner in which you wish to transfer assets to minor children, as directly transferring assets to minors can get complicated. Often, it’s better to establish a trust for the benefit of minor children rather than directly transferring the assets, though a qualified estate attorney can help you make the best decision.

Optional: Establishing a Trust

Where a will offers direction for your assets, a trust creates an entity to manage and administer your assets. The trust document will appoint a trustee or fiduciary to manage the assets, a beneficiary (or beneficiaries) to receive the principal and/or income, and it will establish the parameters of how the trust is to be administered. In the case of a trust for minor children, the trust could provide income to cover expenses until adulthood, at which point the trust is to be liquidated and all assets transferred in full upon their graduation. Similarly, a trust could be established to provide income to a surviving spouse until their death, at which point the trust is to be distributed to any surviving children.

Trusts can be established and funded during your lifetime (called a living trust), or it can be established upon your death. The trust can be revocable, meaning you maintain control of the assets in the trust during your lifetime, or it can be irrevocable, meaning the trust can only be amended or dissolved by the beneficiary. Since a revocable trust only provides you with control over the assets during your lifetime, a revocable trust becomes irrevocable when you die.

For long-term peace of mind, contact us to set up a consultation today. We look forward to helping with your will and other estate planning needs.

Call our Estate team at (480)467-4325 to discuss your case today.

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