By: Ellen S. Morris, Esq., and Howard S. Krooks, Esq., CELA, CAP
As Cassandra mentioned, no matter what your age, there are several essential legal documents that every American adult should have in place, even if you don’t have significant assets. For example, every adult should have a Last Will and Testament or Trust, a Durable Power of Attorney, Beneficiary Designations, a Living Will/Designation of Healthcare Surrogate, and Guardianship Designations for your children. As you get older, it’s even more important to have these documents in place, so that your wishes are memorialized and your heirs receive what you intended after you pass.
There are two types of estate plans – a will-based estate plan and a trust-based estate plan.If you have a will-based estate plan, the essential documents include: a Last Will and Testament, a Designation of Healthcare Surrogate, a Living Will, a HIPAA Representative Designation and a Durable Power of Attorney.
Your Last Will and Testament should contain a detailed list of instructions of how your property should be distributed after you die. If you have minor children, if should also contain provisions for designating a guardian for your children. A Living Will contains a set of instructions on whether you want to receive life-sustaining procedures if you have been diagnosed with a terminal condition or are in a persistent vegetative state, as well as guidelines for your family members to follow if you become terminally ill.
If you have the need for more sophisticated estate planning, a trust-based estate plan should contain a Pour-over Will, a Revocable Living Trust, a Living Will, a Designation of Health Care Surrogate and a Durable Power of Attorney. A Pour-over Will catches the assets that you did not transfer into your trust prior to your death, and only contains minimal instructions for distribution of your assets, because the main estate planning document in this case would be a Revocable Living Trust.
A Revocable Living Trust contains detailed instructions for covering what happens to your property while you are alive, what happens if you become mentally incapacitated and what happens after your die. Assets held in the name of your Revocable Living Trust at the time of your death will avoid probate. Avoiding probate is important because of the time and costs involved. Basically, probate is a legal process that state uses to settle estates, where a will is proven in a court of law and accepted as a valid public document. If a person dies without a trust, the estate will need to go into probate. On average, probate can take six to nine months to complete, or longer if the will is contested or if there aren’t clear records of assets. During the probate process, a person’s estate will be charged for court fees, so probate will mean less money for your heirs (and more for the state).
Another essential document is an Advanced Medical Directive or Designation of Health Care Surrogate. This is where you designate someone to make medical decisions for you if you are unable to make them yourself. It can also be used to designate someone to serve as your guardian if a court determines you to have become mentally incapacitated.
Finally, a Durable Power of Attorney allows you to name the person of your choice to manage your financial assets, including retirement plans, securities and other assets, if you become mentally incapacitated, and it also can be used to transfer assets into your Revocable Living Trust if you become mentally incapacitated before the trust is fully funded.
If you have any questions about the essential estate planning documents needed for your situation or you wish to create or update your estate plan today, please contact us for more information or request a consultation with one of our attorneys today.