There are a myriad of legal strategies you might consider implementing as you design your estate plan. At Right Law Group, our Colorado Springs estate planning attorneys will help you design a one-of-a-kind estate plan to take care of you and those you love. Until then, read on to learn more about the handful of “must have” estate planning documents you must create before anything else.
What are these essential documents I must create without delay?
You should have: (1) a will – everyone needs a will; (2) a health care directive for decisions concerning treatment when you cannot make or communicate your own wishes; (3) financial and health care powers of attorney authorizing “agents” you know and trust to take care of your financial matters and make your health care decisions when you are unable to do so yourself; (4) a legal authorization that allows a loved one or friend to access your medical information; and (5) a trust (based on your situation) to manage, protect and eventually distribute your assets.
Will. A will is a legal document that describes your intentions for your estate when you pass away. Without a will, a person would die “intestate.” In that case, state law divides and distributes the estate to surviving family members based on their relationship to the deceased. No consideration is given under state law to how “close” such family members were to the decedent (or if they fought constantly). Contrary to popular belief, a will has absolutely no legal authority until the maker of the will dies … and the will is given to the proper probate court within the time limit prescribed by state law. Accordingly, your will has no authority to appoint financial or health care decision-makers (agents) for you if incapacitated by an illness or injury (more on that later). In many states, a will is required to appoint the guardians (backup parents) in the event minor children are orphaned. What could be more important than appointing the people you want to rear your children if you are not around?
Health Care Directive. A health care directive, often known by other names such as an “advance directive,” is a document you sign now to specify the type and extent of medical and personal care you would want later were you unable to make and communicate your own decisions. Everyone age 18 and older needs to have this fundamental legal document signed, a copy on file with their physician, and a copy given to each of their appointed agents.
How does a health care directive help my family?
A health care directive appoints the persons (whether in order of priority or as a “team”) you have selected to make end-of-life decisions, so your family and the medical staff know what to do (or what not to do). A directive can take some of the worry and anxiety out of your final days for your family, as they will know your wishes when it comes to making tough choices. With that in mind, choose your “point persons” carefully. They will be charged with carrying out some potentially difficult decision and, perhaps, difficult family members.
Power of Attorney. This is a legal document giving another person — sometimes called “the attorney-in-fact” or “agent” — the legal authority to make decisions on business matters and other issues on your behalf. The exact scope of the power given is spelled out in the document itself. These powers cease when the maker passes away; they also may no longer be in effect when the maker becomes unable to make or communicate decisions. A “durable” power of attorney should be used in that situation, or a health care directive.
Permission to Access Personal Medical Information. This document should be right on top of or specifically incorporated within your health care directive. It is your authorization for named persons to view your medical records and discuss your care with medical providers. Without this document or specific authorization, there is the possibility your doctor may decide not to speak to your designated “point persons” — the persons you want to make those tough decisions about your care if you are in an unresponsive state.
Trusts. These come in all sorts of shapes and sizes. Generally speaking, a trust is a legal entity with at least three parties: the creator of the trust, the trustee, and the beneficiary. With most “revocable living trusts,” you are all three parties. Depending on your circumstances, there could be advantages to establishing a trust. The most common advantage is avoiding probate. This can help streamline administration of your estate should you become incapacitated and upon your death, keeping your plans private in the process. Some irrevocable trusts may protect trust assets from creditors. For example, trusts established under a will or revocable living trust can protect the inheritance for loved ones from squandering, divorces, lawsuits and bankruptcies.
Estate Planning for Young Families
If you are the parent of minor children, these estate planning strategies become even more essential. What arrangements have you made for your child’s care should something happen to you and their other parent?
As with your own personal, health care and financial decisions, would you rather select the guardians (i.e., back-up parents) yourself, or let a probate judge make the selection without your input? Only through proper legal planning and strategies can you select the guaridans and ensure that your family is protected.
While every family situation is unique, here are some general practical pointers to consider when selecting guardians for your minor children:
- Select guardians who share your faith, values and life priorities; and already have an established positive relationship with your minor children;
- Consider, when selecting a married family member, appointing the family member only, in case your family member predeceases or they divorce;
- Make sure your legal plans provide for the compensation of the guardians, or at least that the inheritance is available to cover all legitimate expenses incurred when rearing your minor children; and
- Obtain permission of the selected guardians before appointing them in your legal instruments. That is only meet and right.
Great care must be taken when selecting a financial fiduciary to administer and distribute the inheritance. Simply put, a fiduciary is a person or institution legally responsible for the financial affairs of another. Fiduciaries are held to the highest standards of care and loyalty in this role.
As you can see, selecting guardians and fiduciaries is essential for the physical and financial well-being of your minor children. Few decisions in life are more important. Only you can make these decisions through proper estate planning.
What type of plan is right for you and your family?
It depends on a great many factors. Book a call with the Colorado Springs estate planning attorneys at Right Law Group to thoroughly review your situation and your objectives to create the right plan to protect your family.