When planning your estate the main goal is to protect your loved ones after your gone, and protect yourself if you’re debilitated at some point in your life. To ensure this plan, you will need at least five if not six legal documents as recommended by The Hartford Financial Services Group1:
1. A will states how you want your money distributed when you die. If you do not have a will then the state will make that decision for you. Most states will give one-third to one-half of your assets in your sole-name to your spouse while the remaining will go to your children regardless if their minors. A will also determines who will care for your children after you are gone. If you would like more information visit mystatewill.com.
2. A durable power of attorney gives a trusted person or institution the authority to handle your finances if your are debilitated. (For example, if you were sick in the hospital, this person or firm will be able to write checks from your accounts, file your taxes, and pay your insurance premiums.) You can cancel this document at any time, if you don’t, then “durable” means it is good until you die. A power of attorney that is not “durable” will terminate if you become legally incompetent, which is when you need this document to work.
3. A health care proxy gives a person you trust the authority to make medical decisions if you are unable to speak for yourself.
4. A living will describes the medical treatment you would like to take if you are unable to make those decisions. For instance, whether or not you want to be left on life support if two doctors confirm that you are terminally ill.
5. Copies of beneficiary designations are forms you filed with your Individual Retirement Account provider and the administrator of employer-sponsored retirement plans such as 401(k)s, 403(b)s, and 457s. These forms (not your will) designate who will receive your accounts when you die.
6. A trust is sometimes useful depending on each circumstance. Different kinds of trusts can help you leave money to a minor or surviving spouse to provide some sort of lifetime income.
If you need help with any of these documents do not hesitate to consult a professional. A few ways to find a good lawyer is through friends and/or your financial advisor, you can call your local bar association for referrals, or check Martindale-Hubble Law Directory to find a an attorney who specializes in estate planning.
Sources:
1 “Legacy Lessons.” A Quarterly Publication from The Hartford Saving Today Planning for Tomorrow. 2011