What are the Basic Estate Planning Documents?
If you are thinking about creating a will, you may be under the assumption that you only need a singular document to protect all of your assets. In reality, there are several different types of documents that should be incorporated into your overall estate plan – regardless of how much property you own, how much money you have in the bank and how many people you want to leave your estate to (beneficiaries).
4 Estate Plan Documents
There are 4 basic estate plan documents that every adult should draft to not only protect your possessions but also your livelihood:
- Will or trust
- Financial power of attorney
- Medical power of attorney
- Living will
A last will and testament and a living trust are both documents that allow you to specify how you want your assets, such as property and money, to be distributed after you pass away. In Colorado, if your estate is worth more than $65,000 and you have created a last will and testament, it will be subject to probate after you pass away. This means that the courts will review your will, ensure that everything is in order and confirm that your executor has distributed your estate to your beneficiaries. Your executor will be in charge of these duties on behalf of your estate. The probate process can be short and sweet or quite lengthy and expensive, depending on how complicated your estate is and if there are any contests to your will.
Trusts are not subject to the probate process and are kept private. Your beneficiaries may also be spared from extensive estate taxes if you have your assets placed into a trust. Trusts can be more complicated and expensive to draft.
If you have minor children or an adult child who requires special care, it is important to create a trust for their benefit to ensure that the beneficiary is protected after you pass away. You can also designate guardian to care for your children in the event you (and your spouse) pass away. This clause can be incorporated into a will.
Planning for Your Future
We never know what the future holds. Even if you are healthy and active today, illness, disease or injury can leave you unable to make decisions on your own. The remaining estate plan documents help you plan for your future in the event you become incapacitated. You can appoint a family member, trusted friend or even your estate planning lawyer for any of these designations.
An agent under financial power of attorney is someone you name who can handle your financial affairs for you. This can involve paying your bills, preparing your taxes, selling property, paying medical expenses, buying insurance, etc. This is not done from the person’s own pockets but with your assets. After you pass away, this person is no longer in charge of your finances.
An agent under medical power of attorney is someone you name who can make healthcare decisions on your behalf. This can involve decisions about which doctors will provide treatment for you, approving medical testing and medications, agreeing to surgical procedures, choosing hospitals or rehabilitation facilities, etc.
A living will can help your medical power of attorney and/or your family make difficult decisions about your medical care. Within a living will document, you can specify exactly if/how and even how long you would like to receive life-sustaining treatments such as life support, feeding tubes, resuscitation, etc. You may wish to be kept alive for as long as possible, you may specify that you do not want any type of life-sustaining treatment given – or you may decide that you want some type of care that falls in-between these two extremes.
It is not always easy to start the process of estate planning and some of the documents can be tricky to figure out on your own. It may be in your best interest to hire an experienced estate planning lawyer in Denver to help you navigate this process and ensure you have the right documents in order. The team at The Brown Law Firm, LLC have helped hundreds of clients at all financial levels protect their assets and families. Give us a call at (303) 339-3750 or send us a message online to meet with our experts.