Some activities are more fun than others. However, certain activities in life need to be done. And as unpleasant as estate planning may seem, you will probably feel relief once completed. In 5 Legal Documents, Everyone Should Have – Do You? you’ll explore five legal documents and learn what they are and why they are so important; Will, Living Trust, Advance Directive, Durable Power of Attorney, and Financial Power of Attorney.
Once the process was complete, my experience was that the nagging voice was out of my head, and a sense of relief ensued. Preparing those documents was like pulling teeth, but once done, I could relax. Sometimes just starting a process gives you enough momentum to keep going, so let’s take a look and begin – even if it’s baby steps.
This article is not intended as a substitute for an estate planning attorney or a law firm. As I’m not an attorney, I can’t advise you on your documents’ legality, or which ones your particular situation needs. Each state has different laws. If you fill out your forms yourself, you might want to have an attorney look them over to ensure your wishes are carried out as stated.
Will – Not Grace
A Will is a document that states how you want your estate handled after your death. Not a cheery thought, but it should be done.
What Information Do You Put in Your Will?
In a Will, you state who, after your death, you want to leave your items to, such as furniture, photographs, and jewelry.
If you have minor children or dependents, you can state in your Will who you want to have guardianship over them.
Another stipulation that you can put in a Will is who you want to look after your pets after your passing. Be sure to talk to the person beforehand to be sure they are willing to take on the responsibility. You can stipulate a monetary amount you are leaving for the pet’s caretaker with the intended use for your pet’s expenses (s).
What Is Not Included In a Will?
Some types of property aren’t usually covered in a Will – for instance, insurance policies and bank accounts. This is because they should have beneficiaries listed; thus, a Will usually isn’t needed. However, be sure to check that they have named beneficiaries on all accounts that allow them.
Also, now is an excellent time to update your beneficiaries. Any name changes, address changes, etc., should be updated.
You May Be Interested in Reading: Nolo’s Online Will (Review)
What will happen to your property if you die without a Will? It will go through a process called probate. In probate court, a judge appoints an executor who decides how to dispose of your property.
In other words, the judge appoints someone who decides who gets what – even if it wasn’t your intent or wishes. Another reason a Will is essential.
Together or Separate?
Generally, if you have a spouse, it is suggested that you have separate Wills. Having individual Wills allows each person to have his/her wishes carried out to what happens to their separate property. This can be important if there are previous spouses and or children from other relationships.
Depending on your state, your Will may need to be witnessed. If so, it’s best to have someone that is not part of the Will fulfill that role. Having no interest in the matter, this person will be seen as being impartial. Some states do require two or more witnesses.
You may or may not need to update your Will. It’s a good idea to look at your Will every 2 – 3 years and when any major life events occur. Some of these events include:
- Birth of a Child
- Death of a Beneficiary
Even though you have a Will, it can be contested. When a contested Will means someone is disputing or challenging its contents. Maybe someone feels they were slighted or believes laws regarding probate weren’t followed. Wills can also be contested if someone thinks you weren’t of sound mind or were coerced when signing the Will.
If you believe there is a possibility that someone may contest your Will, you can include a no-contest clause. This type of clause can state something to the effect that if a beneficiary challenges a Will, they will lose any inheritance stated in the Will.
The best thing to do is to be clear and concise about what you want. It’s also a good idea to have an attorney look over your completed estate planning documents.
Below are some standard terms that will be helpful when considering and drawing up a Will are:
- You Or The Person Who The Will Pertains.
- The Person You Assign To Handle Your Estate. They Will Execute Your Will – Follow The Wishes You Stated In The Will. It Is Perfectly Fine To Have More Than One Executor.
- Items That Belong To You. These items Might Include Large Items Such As Property Or Houses, But Also Can Include Things Like Jewelry Or Photographs.
- When Someone Dies Without A Will, It Usually Means That That Your Estate Will Be Distributed Based On The Laws Of Your State.
- This Is The Legal Process Of Distributing Your Property To The Rightful Heirs. This is done through probate court.
- If There Was No Will In Place During The Probate Process, A Judge Will Appoint An Administrator Who Will Act As The Executor. Usually, An Administrator Is Not Known To The Family And Must Follow The State’s Laws; Hence, Your Wishes May Not Be Carried Out.
Revocable Living Trust – Trust No One
A living trust will most likely be one of your primary estate planning documents. A Revocable Living Trust is a written document where you appoint someone to manage your assets if you become incapacitated or in the event of death.
Revocable Living Trusts list assets and how you want those assets them handled. It’s called Living because you create it while living. It is revocable, meaning that it can be changed at any time during your lifetime, assuming you are mentally competent.
Be aware that Revocable Living Trusts need to be funded. Funding refers to transferring ownership of the property from your name to the name of the trust.
Here is a video to explain it a little more.
If you have a Revocable Living Trust, you still need a Will. Why? Because a Revocable Living Trust only covers assets with a title, such as a home, retirement account, car, etc. It doesn’t cover property such as furniture, jewelry, or photographs. You also cannot assign a guardian for dependents in a Living Trust.
Benefits of Having a Revocable Living Trust
- It Allows Someone To Make Decisions For You If You Become Incapacitated – Someone To Step In, If You Will.
- It Avoids The Expense Of the Probate Process After Death.
- It Speeds Up The Process Of Distribution Of Your Assets After Death.
- It Does Not Become Public Record After Death.
Advance Directive & Durable Power of Attorney for Health Care
Many people don’t want to think about not making medical decisions for themselves, but it can happen. Even the healthiest person can have an accident. These documents are both crucial if you are going to have surgery.
The Advance Directive and Durable Power of Attorney for Health Care are two essential documents that give someone the power to make healthcare decisions, or you should you become unable to make them for yourself.
The Advance Directive puts into writing and clarifies your wishes regarding healthcare if you become unable to voice your wishes yourself. This may be because of injury, illness, and psychological issues.
A Durable Power of Attorney for Health Care appoints a person to make your decisions in the event of mental incompetence. You’ll want to be clear about how the person you select should proceed with your healthcare choices.
Not having these documents in place can leave your loved ones in a position to decide your health care when they may not know what you would want. Be sure to have those honest, open discussions.
Financial Power of Attorney
The Financial Power of Attorney allows someone to step in and take care of your financial matters if you aren’t able. Something as simple as paying your bills or applying for assistance can be so much easier if you have this document in place.
The Financial Power of Attorney gives whoever you appoint the right to access your bank accounts and to make financial decisions for you. Due to the power that the document gives the person you designate, choose someone you can trust to have your best interest at heart.
Because you need to be mentally competent for the document to be considered legal, it’s essential to have this document in place before you need it.
For someone to get a Financial Power of Attorney after they are incapacitated is nearly impossible. A court procedure known as guardianship or conservatorship will need to be conducted in a case like this.
Documents, Documents, Documents – Are They Necessary?
Completing estate planning documents may seem overwhelming but can be so worthwhile. Once in place, you will have peace of mind knowing that your wishes a clear, leaving your loved ones with a clear understanding of what you want.
There are computer programs that assist you in creating your own legal documents. I wrote a review of the computer software program Quicken WillMaker & Trust 2022 (Buying Guide & Review); you might find it beneficial if you are looking into creating these documents yourself.
Depending on your life circumstances, there may be other documents that you would find beneficial for you.
Again, if you prepare your documents yourself, it’s wise to consult with an attorney or law firm for them to look them over and make sure all the forms have been completed correctly and in line with your specific state laws.
Thank you for stopping by and taking a look at 5 Legal Documents Everyone Should Have – Do You? I hope you have found some value in what you’ve read.
Do you have any experience with preparing legal documents that you would like to share? Please comment below; I would love to hear them.