Estate planning is not limited to a last will and testament.
If you have watched a Hollywood movie or read a novel about someone leaving an inheritance, you have likely heard of a last will and testament.
This is unsurprising as it is the most common legal document used to distribute assets to heirs.
Unfortunately, media uniformly seem to reduce estate planning to a last will and testament.
According to a recent Forbes article entitled “Estate Documents You’ll Need Beyond A Last Will And Testament,” comprehensive estate planning extends far beyond this document alone.
What other estate planning documents can help protect assets and loved ones?
Revocable Living Trust.
Like a last will and testament, a revocable living trust (RLT) guides the distribution of assets to heirs.
Unlike a last will and testament, a RLT does so outside of probate.
However, for the RLT to direct assets to heirs outside of probate, it must be funded with those assets.
With a RLT, the individual who made the trust can make changes at any time.
Living Will or Advance Directive.
Advanced health care directives and living wills are fundamental to incapacity planning.
Even if you are not incapacitated, these documents may be required by medical personnel prior to allowing you to undergo certain medical procedures.
What do they do?
These documents provide instructions to health care providers and family members regarding the types of lifesaving or life-prolonging procedures you would like (or not like) if you are unable to communicate these yourself when relevant.
Healthcare Power of Attorney.
A healthcare power of attorney is also important for the incapacity planning part of estate planning.
Rather than outlining your wishes, this document allows you to appoint a trusted person or persons to make medical decisions on your behalf.
Financial Power of Attorney.
A financial power of attorney is used to designate an agent to manage your financial affairs if you cannot do so yourself.
The types of authority granted depends on the specific power or attorney, which can be drafted as very general or very limited.
If you do not yet have these documents as part of your comprehensive estate plan, work with an experienced estate planning attorney to do so.
Reference: Forbes (Feb. 18, 2022) “Estate Documents You’ll Need Beyond A Last Will And Testament”