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Estate Planning Documents - What You Need, What’s Optional & More

We often think of our Estate Plans as mirrors that reflect what’s going on with our lives. It reflects the assets we own, what we decide to do with them, which beneficiaries we choose, and so on and so forth. As we age, it’s only natural for our Estate Plans to become more thorough and complex. It’s also natural to make plenty of changes throughout our lives.

However, there is one thing that remains constant: the estate planning documents needed, no matter our age. Keep reading to find out the 5 documents you absolutely should include when creating an estate plan, regardless of whether you’re 25 or 43.

What are the legal documents needed for estate planning?

The legal documents needed for estate planning are those that will address the ownership of assets when you pass away. The bare minimum of an Estate Plan should include a Last Will and Testament, which is the surefire way to control these outcomes. We’ll explain what a Will is, and why you must have one in place, shortly.

5 Estate planning documents needed at any age

The intention behind and thus the design of your Estate Plan will evolve throughout your lifetime. Our incentives and desires naturally change with time, as our families and assets grow. That’s why the directives and requests of a 20-something will look completely different from that of a 50-year-old.

However, the foundational structure of an Estate Plan should be consistent from person to person, no matter their age. This is because everyone should have the same 5 estate planning documents, regardless of age, net worth, or marital status. Other documents are optional based on your personal circumstances.

If you aren’t feeling sure how to structure your Estate Plan, let this bring you some clarity. Before you do anything else, make sure that you have these 5 non-negotiable estate planning documents in your name:

  1. A Will

  2. Beneficiary Designations

  3. Health Care Proxy

  4. Living Will

  5. Durable Power of Attorney

1. A will

A Last Will & Testament should be the starting point for anyone planning their Estate Plan. This legal document is the very foundation of estate planning, as it states how you want your assets to be distributed if you were to pass away.

In your Will, you would list your property and assets and specify who should inherit each asset. These individuals are your beneficiaries, and are often your loved ones, such as your spouse or children. By putting a Will in place, you’re making sure that your assets are protected and will go to the right people if anything were to happen to you.

You can also use your Will to name guardians for your pets or children.

2. Beneficiary designations

Although your beneficiary designations are not a literal estate planning document, it’s an aspect that is critical to the process.

When you set up any type of financial account, such as a bank account, retirement account, or life insurance policy, you are given the option to name a beneficiary. Here, you can elect to pass the respective asset directly to a beneficiary of your choosing. The asset is not included in your estate and does not have to go through the probate process.

3. Health care proxy

Many of us feel invincible, especially when we are young. This gives us a false sense of security, and we don’t feel incentivized to take necessary precautions. However, if we learned anything from the COVID-19 pandemic, it would be that we are all vulnerable to severe illness, no matter how healthy we are.

Regardless of age, everyone should set up an Advance Directive, which includes a Health Care Proxy. This document allows you to name a Proxy who is authorized to make medical decisions for you if you can’t make them for yourself. This could be due to a temporary, long-term, or permanent incapacitation. In other words, when you can’t communicate your own needs or make your own decisions.

4. Living will

Along with your Health Care Proxy comes your Living Will. They are both part of your Advance Healthcare Directive, and holistically address what should happen in case you are incapacitated and require medical care.

Ask yourself, how will your Health Care Proxy know what you would have wanted? Through your Living Will. In this document, you will address common medical scenarios and make your wishes known. This eases the burden on loved ones when tough decisions are already made for them. They can have more confidence knowing that their decision-making is in line with what you would have wanted, because you’ve gone through the trouble of documenting it.

5. Durable power of attorney

Last but not least, don’t forget to set up a Durable Power of Attorney. This is a document that you would use to designate an agent who is authorized to act on your behalf. They are similar to your Health Care Proxy, but are typically in charge of making financial, personal, and business-related decisions on your behalf. A traditional Power of Attorney expires if you were to become incapacitated. Instead, we recommend appointing a DPOA. That way, you can have peace of mind knowing that someone you trust is keeping business running for you when you can’t.

Other recommended estate planning documents

As long as you have the 5 must-have estate planning documents in place, you can rest easy knowing that you, your assets, and your loved ones have strong protections in place. However, this doesn’t mean that you have to stop there. Based on your unique circumstances, you may opt to set up additional estate planning documents.

The following discusses additional estate planning documents to consider.

If you have children: designated guardians

If you have children, be sure to set up a guardianship. A legal guardian is someone who will step in and provide care for someone you love. A guardianship isn’t limited to children, it could also be for an elderly parent, a dependent adult child, or even your pets!

When the guardian steps in, they are responsible for providing whatever is necessary to ensure the wellbeing of the person under their care. This could include food, shelter, education, medicine, and other needs. Ideally, they can provide love, empathy, and attention as well.

A trust

A Trust is an optional but significant building block in the world of estate planning that you should certainly consider. A Trust is a fiduciary arrangement that allows a third party to own and manage your assets.

Why would you do that? Well, a Trust offers a myriad of benefits that aren’t obvious at first. For starters, any assets held in a Trust are not considered a part of a deceased person’s estate. This means that these assets don’t have to go through the probate process, which is lengthy and expensive. The Trustee has the power to distribute assets directly to the beneficiaries without delay, so long as the Trust terms allow it.

Further, you have more control by using a Trust. Not only can you set up certain terms and instructions for the Trustee to follow, you can also set specific conditions or requirements that must be met. You essentially get to control your assets long after you’re gone. For instance, let’s say you have a wild child who has a tendency for mischief and partying. You’re aging, and you’re worried about handing over your estate to them while they’re still showing signs of irresponsibility. By placing your assets into a Trust, you can leave instructions that your Trustee should only distribute assets to your child over time, after they’ve reached a certain age, or met certain milestones. Better yet, leaving your assets in a Trust long-term will give them more time to grow and benefit your beneficiaries even more.

Create your estate plan today

Many people drag their feet on starting their Estate Plan because they perceive it as a complex, laborious process. Although it can be, you have the power to make the process as painless as possible.

When tackling any project, it’s helpful to go in with a game plan. It helps you stay focused and break up a larger task into smaller, achievable chunks. In this guide, we revealed the 5 estate planning documents that you should have, no matter your age. Feel free to use this as your roadmap to getting your Estate Plan in place. Focus on setting up each of the 5 documents in order, and you’ll have a robust Estate Plan before you know it!

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