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We all hope that terrible circumstances never hurt us or our loved ones. But if you have a realistic plan for your eventual death, it will be easier for you. Whether you die suddenly young or live to be 140.
Here are six key estate planning documents that most people will end up needing. You may think that a will is all you need, but once you understand how it all works, you’ll know why you need these documents, and your family’s needs and your ultimate wishes. You can see how those documents work together to meet your requirements.
Remember, you don’t want to end up like Chadwick Boseman’s family.
If you don’t have a solid estate plan, read on to find out what you need.
suicide note
A will is basically a declaration of who gets what property when you die. If you owe money at the time of your death, the assets will be used to pay off the debt and the rest will be donated to the beneficiaries, the people (or charities) you choose in your will.
For parents, a will also contains information about who will care for their children and furry babies if they die.
A will (or last will) is the most important document regarding estate planning, all adults Is required. Even if your net worth is negative (meaning you owe more debt than you own), a will can help. This document tells you who should receive your personal items (jewelry, musical instruments, personal items). And in a few years, with more assets, everything will be handled properly.
Instead, a basic will that you sign in front of two friends will suffice. Want to make a will on a budget?My girlfriend and I used the legal services on campus to get a will done for free while my husband was in school.
I also received a heavily discounted will from an attorney using the company’s legal services. At the time, I asked both attorneys about legal template services like her LegalZoom offers, and neither seemed impressed with the service.
However, in my non-professional and legal opinion, you don’t need a will written by a lawyer unless you own property, have children, or have a large amount of assets. Use free templates online or purchase templates from LegalZoom or similar services.
When drafting a will, be sure to list all assets (don’t forget digital assets such as domain names and websites), liabilities, and who will administer the will. To legally make a will, be sure to sign it in front of witnesses.
This should be a physical document, but it’s helpful to keep a digital copy.
living will
A living will is a document that describes your medical wishes. Most people include information about whether they want to be kept alive by a machine if there is no hope of recovery. Information on pain management and organ donation may also be included.
People who hold to certain beliefs that influence their medical decisions should state those beliefs on their living will.
This should be a physical document, but it’s helpful to keep a digital copy.
medical power of attorney
A medical power of attorney is a document that authorizes a person (usually a spouse, parent, adult child, or close friend) to make medical decisions on your behalf. This document is also called an advance medical directive.
A medical power of attorney is different from a living will. It is intended to prepare for unpredictable scenarios. Your agent (the person you appoint to make decisions on your behalf) has no authority until you can no longer make decisions for yourself.
Medical power of attorney becomes increasingly important when facing cognitive disorders such as Alzheimer’s disease or dementia.
Many people think of a medical power of attorney as a document for older people, but this document is just as important for young people. If you are unmarried and would like an unmarried partner, friend or sibling to act as your representative, please complete the paperwork. If not, a parent could be your agent.
This should be a physical document, but it’s helpful to keep a digital copy.
financial power of attorney
A financial power of attorney is the right of someone you appoint to make financial decisions on your behalf. A financial power of attorney is usually drafted to be valid only for a limited period of time or if you become incapacitated.
A limited financial power of attorney may be appropriate if you want someone to continue paying your bills while you are deployed overseas on military operations. This person should be able to access your bank account and pay bills on your behalf. But be careful with this. Anyone with access to your account has the power to steal from you, so he must trust that person.
A “gushing” financial power of attorney comes into effect when you become mentally or physically incapacitated.
This should be a physical document, but it’s helpful to keep a digital copy.
Note: Many financial institutions have their own forms that must be completed in addition to the Financial Power of Attorney. A POA alone isn’t enough to do that, but having the appropriate forms filled out at your bank or investment firm can be very helpful.
Life insurance
Not everyone needs life insurance, but if you have life insurance, it’s important that your beneficiary has access to your documents. Depending on where you have your policy, it may be easy to obtain your policy documents by downloading them online, or you may have to overcome many obstacles to access them.
If you do not have easy access to your policy documents online, we recommend that you store them in a fireproof safe and inform someone (preferably your spouse or other income beneficiary) about your policy.
Also, be sure to consider the amount of insurance each time a life event occurs. When you get married, buy a house, get a big raise, and have kids, you may want more insurance.
Check out this list of where to get the best term life insurance.
Digital Will: Accessing Your Digital Life
One of the less considered aspects of real estate planning is what will happen to your digital life when you die If you own an income-generating digital asset (such as a website), consider whether you want your spouse or loved one to take over it if you pass away. If you don’t have a clear succession plan, establish a relationship with a digital broker who wants to buy your site.
Apart from your financial wealth, your heirs should be able to access your digital life, including financial institution passwords, social media passwords, online storage accounts (Dropbox, cloud-based storage for photos, etc.), and the web. . Base properties (think digital movies and books).
It’s not easy for me to keep them organized, so I created two LastPass accounts. The first account is a work-based account. This account has a colleague as my emergency contact. If I get sick or die, that colleague will be able to access my account.
My other LastPass account is a personal account that contains all my personal passwords, life insurance information, etc. Her husband is my designated emergency contact. Also, I helped him set up a similar password his manager for his account.
What resources can I find helpful?
If you have a large amount of wealth and are beginning to think about distributing it in an effective way, it makes sense to consult a financial planner, accountant, or estate planning attorney. These professionals can create a bespoke plan to ensure that your assets are distributed according to your wishes.
Of course, not everyone needs a bespoke plan. If you are a parent with a small number of assets and a life insurance policy, you may want to have an attorney help you draft a will. Professionals give us peace of mind that everything is fine.
In my experience, the discounted legal services offered through my company have been more than sufficient to meet this need. If you can’t find free or discounted legal services, American Bar Association Attorney Discoverer To find an attorney licensed in your state.
You may also consider using newer tools such as Trust and Will, an online service that can help you prepare your paperwork. Click here for “Trust and Will”.
The last resource I recommend is Emergency (ICE) Binder. This binder is a tool specifically designed to help parents make practical plans for emergencies. This binder is very practical and includes sections for everything from how to use your insurance money to your child’s schedule and preferences.
Editor: Clint Proctor
Reviewed by: Chris Muller
This post, “Essential Planning Documents: What You Need and Why,” was first published in The College Investor.