What happens to your financial assets and liabilities (your estate) when you die? Who gets what and when?
If you do not answer and act on these questions, the government will. And typically, the government’s solutions are not the optimal solutions for you.
Addressing these questions falls into the realm of what typically is referred to as “estate planning.” There are several ways to address your estate planning from writing a simple document that presents your desires to having an attorney draft legal documents. Our strong recommendation is to use an estate planning attorney to draft legal documents. He/she can discuss your options and ensure you understand the implications of each; he/she understands how to properly draft your desires into legal verbiage that will be interpreted accurately by the courts; and he/she will ensure that all the necessary documents are drafted to meet your various needs.
Five documents generally constitute a standard estate plan: 1- A will. This document states who will manage your estate regarding legal issues, states who the guardian of your children will be, and addresses any other personal desires. 2- A revocable trust. The trust created by this document is a legal entity that owns your assets, and the document identifies how and who controls your assets. Being revocable allows you to change the trust verbiage and assets owned at any time. Typically, you will be the initial trustee who controls the assets owned by your trust. 3- A living will/medical directive. This document addresses how you want to handle situations where you become terminally ill and/or on life support. 4- A power-of-attorney for health care issues. This document identifies who will make decisions regarding your health care if you are not able. 5- A power-of-attorney for legal issues. This document identifies who will make decisions regarding the management of your financial assets, including investing, taxes, etc. if you are not able.
Be sure a copy(s) of these documents is readily accessible to appropriate people as the documents typically become important when you are not mentally, emotionally, or physically available. Also, discuss your desires with the individuals you name in these documents, so they know how you want matters handled.