Financial planners who help families build and manage assets are often asked what documents are needed in an estate plan. The following documents create a foundation of an estate plan: an up-to-date will, a durable power of attorney for health care (sometimes called a health care proxy), and an advance health care directive (also known as a living will).
Property transfer clarity. We hear about the disastrous fallouts when celebrities die without wills or other crucial documents in place. Elvis Presley is a famous example, but there are countless others, including James Gandolfini, Whitney Houston and Phillip Seymour Hoffman in the past few years. Who needs that kind of drama?
If you have a valid will, the transfer of assets is much less confusing and difficult. A will tells your executor or personal representative how your assets should be distributed. A will can also state the order in which your heirs should receive these assets—in case funds run out before all of the bequests are fulfilled.
When property is owned jointly with two names on the title, it passes automatically to the surviving owner. Other financial assets, like life insurance proceeds and funds from retirement plans, are likewise automatically transferred to the named beneficiaries. Make certain these are up-to-date. If neither of these applies and there is no will to present to the judge, he or she will finalize the transfer of property in probate according to state law.
In case of incapacity. Remember Terri Schiavo, the young Florida woman? Months after she'd suffered severe brain damage, she remained in a persistent vegetative state. Her husband wanted to remove the feeding tube keeping her alive, claiming she wouldn't have wanted to be on artificial life support, but her parents were against this. Terri didn't have any estate-planning documents to indicate her wishes, and as a result, this saga lasted almost a decade with the courts, Congress, and even President George W. Bush becoming involved.
In the event you become incapacitated, there are two legal documents that can help express your wishes. One is a living will or an advance health care directive. This details how you want to be treated at the end of life, so that your appointed agent can make decisions in accordance with your wishes. The second is a durable power of attorney for health care. In this document, you name the person who'll make those decisions on your behalf.
Where to get estate documents. You can get estate-planning documents from an estate planning attorney, lawyers who focus their practices on estate planning. These attorneys can help you transfer property to your heirs in the most tax-efficient way possible and make sure your plans adhere to the state estate laws where you live.
Although you can search the Internet for services that provide templates for wills, powers of attorney, and health care directives, you are infinitely safer to have an experienced estate and trust attorney who understands your family's specific circumstances prepare these documents. There are more disastrous cases that result from do-it-yourself legal documentation than from those that are handled by an experienced estate planning attorney.
Talk to an estate planning attorney to draft these documents to meet your family's needs and ensure that when you have passed away, your property will be distributed according to your wishes. Doing this now will be greatly appreciated by your family.
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Reference: NASDAQ (December 16, 2015) "Why You Need Key Estate-Planning Documents"