The 5 Most Important Estate Planning Documents

Planning for death may seem morbid, but it’s a necessity for most folks. Most people will likely only need four or five estate planning documents to establish a comprehensive estate plan. However, complex medical needs, capital structures, and real estate may require a bit more detailed planning.

5 Key Estate Planning Documents

In most cases, it’s best to hire a professional estate planning lawyer to prepare these documents. Yet, if your estate is simple enough, you may be able to create your estate plan without an attorney. 

1. A Will

A will ensures that your property goes to the people you want to receive it after your death. If you don’t have a will, the state could distribute your property to folks who might not be the people you’d choose. There are a few critical components of a will other than listing who will receive your money and other physical possessions, such as establishing guardianship for dependents, a letter of instruction, and naming an executor of the estate.

Guardianship

One of the most important and sensitive decisions a parent or caregiver can make is who would raise your child or dependent in the event of your passing. When you name a guardian in your will, you can ensure that your dependents maintain their quality of life and are cared for by someone you trust.

Letter of Instruction

Including a letter of instruction with your will might be helpful to avoid family disputes. You might want to explain why you’ve left specific property to certain people or your expectations for a dependent’s care. For more tips, read our article about explanatory letters.

Executor

Make sure to name an executor of your estate in your will. Choose someone who is responsible and willing to take care of your estate. Ensure that your executor has organizational skills and doesn’t fold under pressure, as estate distribution can be complicated.

What is a “pour-over” will?

A pour-over will is a type of will that works in conjunction with a trust. It is designed to ensure that any assets you own at the time of your death are transferred into the trust upon your passing.

The primary purpose of a pour-over will is to act as a safety net or backup plan. Even if you have diligently transferred most of your assets into the trust during your lifetime, there may be some assets that were inadvertently left out or acquired shortly before your death. In such cases, a pour-over will ensure that those remaining assets "pour over" into the trust upon your death. This process helps to maintain the integrity of your overall estate plan.   However, wills do usually have to go through the lengthy and expensive probate process, a frustrating process for family members and heirs.  Therefore, do not rely on the pourover will to transfer assets into your trust.

When creating a pour-over will, it's essential to work with an experienced estate planning attorney who can ensure that the document is properly drafted and coordinated with your trust. This process will help ensure that your assets are protected, your wishes are carried out, and your loved ones are provided for in accordance with your estate plan.

2. Power of Attorney

A power of attorney document grants someone the authority to make legal and financial decisions on your behalf if you become incapacitated or unable to make decisions for yourself. This person, known as your agent or attorney-in-fact, can handle tasks such as managing your bank accounts, paying bills, and making healthcare decisions. It's important to choose someone you trust implicitly, as they will have significant control over your affairs. 

3. Advanced Medical Directives or Healthcare Proxy

Similar to a power of attorney, a healthcare proxy allows you to appoint someone to make medical decisions for you if you are unable to do so. This person, also known as your healthcare agent, will advocate for your medical preferences and ensure that healthcare professionals follow your wishes regarding treatment options, life support, and end-of-life care. Discuss your healthcare preferences with your chosen proxy to ensure they understand and are willing to fulfill your desires.

You can also include advanced medical directives in a living will or with a do-not-resuscitate order.

4. Living Will

A living will, also known as an advance healthcare directive, outlines your medical treatment and end-of-life care preferences. It specifically addresses situations where you are terminally ill or permanently unconscious and unable to communicate your wishes. This document guides healthcare professionals and your healthcare proxy in making decisions on your behalf. It's important to regularly review and update your living will to reflect any changes in your medical condition or personal beliefs.

5. Trust

A trust is a legal entity that holds and manages your assets for the benefit of your chosen beneficiaries. By transferring your assets into a trust, you can avoid probate, maintain privacy, and potentially minimize estate taxes. There are various types of trusts, such as revocable living trusts and irrevocable trusts, each serving different purposes. Consult with an estate planning attorney to determine the most suitable trust structure for your specific needs.

How Can an Estate Planning Attorney Help?

While the thought of estate planning may be uncomfortable, having these essential documents in place can provide peace of mind and ensure that your wishes are carried out after your passing or in the event of incapacity. Consulting with an experienced estate planning attorney can help you navigate the complexities of estate planning, ensuring that your documents are legally valid and aligned with your specific goals. Our comprehensive legal directory lists the best providers in your area if you need to find a qualified attorney. 

In addition to drafting the necessary documents, an estate planning attorney can assist with minimizing taxes and avoiding probate after your passing. A good lawyer can help you explore strategies to protect your wealth and provide for your beneficiaries. For example, an estate planning lawyer can advise you on gifting assets, setting up charitable donations, and establishing legal trusts.

Remember to review and update your estate plan periodically, especially after major life events, to keep it current and reflective of your changing circumstances. By taking the time to plan now, you can protect your loved ones and continue to care for them after you pass.