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4 Estate Planning Documents Everyone Should Have

August was National "Make a Will" month.  Check out our previous blog post to learn why you should have a Will in place, regardless of your assets. 

The most common estate document is a Will, or Last Will and Testament.  The main purpose is to distribute property to heirs after your death according to your wishes. In your Will you can name an executor to manage and settle your estate as well as a legal guardian to care for your minor children. Wills are legal documents, filed with the court, and become public record as part of the probate process. 

In addition to a Will, there are 3 other very important estate documents everyone should have in place:

First is a Durable Power of Attorney, sometimes called a Financial Power of Attorney. This allows you to authorize someone to act on your behalf to handle your financial matters if you become mentally or physically unable to do so. Without this document in place, those closest to you would likely have to ask a court for the authority over some of your financial affairs. The named individual can do things such as: 

  • Pay everyday expenses
  • Watch over your investments
  • Handle transactions with banks
  • Buy and sell insurance policies for you
  • Operate your small business 
  • Transfer property to a Trust you've already created, and 
  • Even file your taxes 

A Financial Power of Attorney document can be drafted so that it goes into effect as soon as it's signed. Specifying that it is "durable" is important as it will ensure the powers granted in the document don't end if you later become incapacitated. Alternatively, these documents can specify that they do not go into effect unless a doctor certifies that the individual can no longer make decisions for themself (i.e. is incapacitated). 

Some states have standard Durable Power of Attorney forms you can utilize, but you can also use your own. Generally speaking you should expect to sign the document in front of a notary, but some states may require witnesses.  Additionally, some banks and brokerage companies require their own forms in additional to your general Financial Power of Attorney form. Be sure to check with the institutions with which you have a relationship to ensure the correct forms are completed.  

The next document you should have is an Advanced Medical Directive. This document lets others know your wishes regarding medical treatment in the event your are terminally ill, seriously injured, in a coma, in late stages of dementia, or near the end of your life. There are 3 types: 

  • Living Will, 
  • Healthcare Proxy, and 
  • "Do not resuscitate" order or DNR 

Living Will
This is a legal, written document that specifies medical treatment you do and do not want used to prolong your life. It also specifies your preferences for other decisions such as the use of pain medicine and organ donation.

Healthcare Proxy
This may also be called a Durable Power of Attorney for Healthcare. The individual granted these decision making powers may also be referred to as a "Healthcare Agent,"  "Patient Advocate," "Healthcare Surrogate," or another name depending on the state you live in. This individual should meet any state requirements for the role and cannot be your doctor or part of your medical care team. Your Healthcare Proxy should be an individual you trust to make decisions related to your medical care that are inline with your wishes and values.

DNR or "Do Not Intubate" Orders
Both DNRs and DNIs can be established outside of a Living Will or Advanced Medical Directive. You can tell your doctors your preference and they will write the orders and add them to your medical record. Having these orders included in your documents, however, helps to ensure your wishes are respected if you are brought into the hospital and are unable to communicate your wishes. 

Lastly is Letters of Instruction. This is the document that is most frequently overlooked. A Letter of Instruction is a non-legal, generally informal document, that typically accompanies your Will and details things like your burial wishes or locations of important documents. Unlike a Will, Letters of Instruction remain private. 

Multiple originals and copies of these documents should be retained. Some people keep a set of originals in a safe deposit box at their bank and have names on file with the bank of people who can access the box. Usually copies are also stored in the individuals home or office. It is also a great idea to give the documents to the individuals who are named to act on your behalf so they can easily produce them when needed. 

Regardless of your age, health, or income, these are 4 very important documents to have. I talk to clients all the time that know exactly what they want to happen when they pass away, but few have thought through what they want to happen if they are incapacitated.  These estate documents make sure your wishes are carried out which removes a huge burden from family and friends during a time of grieving.