Everybody understands you need a healthy estate plan. However, most people—unfortunately—put off creating their estate plan until it’s too late. The truth is the moment you need your estate plan is the same moment it’s too late to create one. This is why you need to create a healthy estate plan today. So how healthy is your estate plan?
A healthy estate plan contains 3 main documents: a will, a health care directive, and a durable power of attorney. Each of these three documents are extremely important in creating a healthy estate plan. Each document provides an essential element the other two simply do not. This is why you need each of the three documents in your estate plan. In this article I’ll explain each of these three documents and why they’re important to a healthy estate plan.
Simple Will
The first important document in a healthy estate plan is a will. A will is a legal document that coordinates the distribution of your assets after you pass away. A will can also appoint guardians for any minor children. It’s important for you to have a will because it allows you to communicate your wishes concerning your assets clearly. You ensure your property is divided and distributed according to your desires.
If There Is No Will
If you die without a will, the State where you live decides how your assets are distributed. This is known as dying intestate. The result of dying intestate is your assets may not be distributed to the people you wish. Additionally, the State will appoint guardians for any minor children. Finally, the State will appoint an executor for your estate. This executor will then be required to pay a hefty bond in order to protect your estate.
You can prevent all of this from happening by simply having a will. A will insures your assets are distributed as you wished. Additionally, a will allows you to appoint guardians for your minor children. Finally, having a will allows you to appoint your own executor and waive the bond requirement. Waiving the bond requirement removes the financial hardship that would have been placed on your executor.
Contents of a Will
A simple will includes the following elements: the designation of an executor, beneficiaries, and guardians for any minor children. The executor is the one who carries out the provisions of the will. The beneficiaries are those who are inheriting the assets of the deceased. Finally, guardians are those who will take care of the minor children after the person dies. If you have minor children, a good will will include all three of those elements. If you do not have minor children, your will needs to include, at the very least, the designation of an executor and the beneficiaries.
Probate
Probate is the legal process of settling an estate. This process occurs whether you have a will or not. The court opens the estate and distributes the assets to those entitled to receive them. Probate can be an expensive and complicated process for those who die intestate. This creates a burden for both the family and the one who is appointed as the executor. However, you can greatly reduce this burden. The probate process becomes much less complicated and less expensive if the person simply has a will.
Learn more about the necessity of a will by reading my article 8 Reasons You Need a Will. Just click HERE to check it out.
Health Care Directive
The next document you need in order to have a healthy estate plan is a health care directive, commonly known as a living will. This is a legal document explaining how you want medical decisions to be made when you can no longer make them yourself. This directive informs your doctors and your loved ones what decisions you want to be made concerning your health care. Additionally, this directive also informs everyone who is permitted to make decisions on your behalf.
A health care directive is extremely important when you’re no longer able to make decisions yourself. Therefore, this document is an important guide for your loved ones. A health care directive helps your loved ones make clear decisions concerning your health care in the same manner you would have. These medical decisions may also include any types of special or emergency care that you may need.
A health care directive documents your wishes concerning receiving life-sustaining treatment and receiving food from a tube. You need to think about your choices and document your decisions before they have to be made. You do this through a health care directive.
Peace of Mind
Additionally, having a health care directive gives your loved ones a peace of mind knowing they are following your wishes. I’ve seen families torn apart arguing whether or not a loved one should receive life-sustaining treatment when the loved one did not have a health care directive. By having a health care directive you give your loved ones the guidance and peace of mind knowing they are doing the right thing.
Each State has its own laws concerning health care directives. Therefore, consult an attorney about executing your health care directive while you’re still healthy. Do this now just in case you become unable to make medical decisions for yourself in the future. Like all three of the documents in your healthy estate plan, the moment you need a health care directive is also the moment it’s too late to create one.
A health care directive only applies to health care decisions. This document does not affect any financial matters. You do need a document that concerns and protects your financial matters in your estate plan. This document is the next one I’ll be addressing. It is the power of attorney.
Power of Attorney
Finally, the last document you need in order to have a healthy estate plan is a power of attorney. Where the health care directive concerned your medical care, the power of attorney concerns your financial matters. A power of attorney is simply a legal document that allows someone else to act on your behalf. This document is extremely useful when you need someone you trust to have the power to make your financial decisions.
The person you appoint as your power of attorney needs to be someone you absolutely trust. This is because they’ll have the ability to make financial decisions on your behalf. This document is important because if you do not appoint a power of attorney in advance your loved ones might have to go to court to have a guardian appointed. This can be an expensive and lengthy process.
The power of attorney is an invaluable tool when planning for future incapacity. Future incapacity means several different things, but essentially it means being unable to make decisions yourself. This could be because of dementia, brain injury, or any other mental impairment.
The Durable Power of Attorney
The power of attorney you want to include in your estate plan is called a durable power of attorney. It’s durable because it continues to be effective even if you become incapacitated. A power of attorney is effective immediately… where as a durable power of attorney is effective immediately and continues to be effective even after you’re no longer able to make financial decisions yourself.
You need to execute a durable power of attorney in advance while you still have the mental capability to make decisions. The moment you lack the mental capacity to make decisions you will also lack the mental capacity to execute a power of attorney. Therefore, like the will and the health care directive, you need to execute the power of attorney now.
Conclusion
A healthy estate plan consists of three documents: a will, a health care directive, and a durable power of attorney. All three are important…all three are needed. Simply put, you need a properly executed will, health care directive, and durable power of attorney.
The above is not legal advice. Should you need advice on drafting a will, health care directive, or a power of attorney contact Chris Baldwin Law.
Schedule a free consultation with Chris Baldwin and have your healthy estate plan drafted and properly executed within a week.
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