Regardless of how old you are, what condition of health you are in, and how much money you have, there are several estate planning documents that are recommended in order to help simplify things for family members.

1. Durable power of attorney (DPOA)

In the case that you are unable to manage your financial affairs, a durable power of attorney allows you to choose someone to look after them in order to protect your interests. This person may do things like file taxes, keep an eye on your investments and pay day to day expenses.

2. Advanced medical directive

Advanced medical directives allow you to express your medical wishes in the event that you are unable to do so on your own. Additionally, they can be helpful in letting others know what type of medical treatment you would want in the case of an emergency. There are three types, each allowable depending on the state.

  1. Living will – Gives you to the option to approve or decline different types of medical care, even if declining care could result in your death
  2. Durable power of attorney for healthcare – Allows you to choose someone to make medical decisions for you, with you specifying up front how much power that individual will have
  3. Do Not Resuscitate order – An order from a doctor saying not to perform CPR if you go into cardiac arrest

3. Will

A will is a document that lists the dispersion of your assets to your heirs after your death. With this, you can name the executor, or person who will manage and settle your estate, along with a legal guardian for children or dependents. It’s important to keep a document like this up to date.

4. Letter of instruction

A letter of instruction is a document that generally goes hand in hand with your will, explaining more personal wishes, such as your burial preferences. This document remains private, unlike a will, and contains suggestions to the people addressed in the letter.

5. Trusts

While a trust may not be as essential as the items already mentioned, trust documents can be very helpful in accomplishing your estate planning goals. Whether managing your own assets or controlling what happens to them after your death, the versatility of a trust can be helpful in planning for the future.

To break it down, a trust is something that holds assets, like money or property, for someone else. There are usually three parties in a trust arrangement:

  1. The grantor: The person who creates the trust and funds it
  2. The beneficiary: The person(s) who receives the assets in the trust. They have equitable title to trust property
  3. The trustee: The person(s) who hold legal title to trust property and administers the trust. It is their job to act in the best interest of the beneficiary

To create a trust, you must create a legal document called a trust agreement. This names the beneficiary, the trustee and contains further details such as when the trust will end and what duties the trustee has. To fund a trust, all different kinds of assets can be put in. For example: cash, stocks, bonds, insurance policies, real estate and artwork are all common. What you put in will depend on your goals.

Some advantages of a trust consist of being able to preserve assets for your children until they are grown, avoiding the expense and delay of probate and setting up a fund for your support in the event of incapacitation. Disadvantages include the costs that go along with starting and maintaining it, and the fact that you will have less control over assets put in.

Types of Trusts

There are various types of trusts that can be part of an overall financial plan. For more on these, click on any of the following, email Mike or call him at 314-822-0344.