Are you concerned about what it takes to plan your estate for your family after you have passed? Here we’ve provided you a step-by-step guide to understanding what it takes to have everything in order.
What documents do you need?
The key documents that every person needs for an estate plan:
- Power of Attorney form
- Advance Medical Directive
- Last Will and Testament
Power of Attorney – What is it and how does it work?
The Power of Attorney form is used by your trusted contact to handle your financial affairs if you are alive but unable to manage your own affairs. The form is used to allow your person to:
- Pay your bills;
- Handle your insurance policies and payments for your homeowners, automobile, health as well as any other insurance needs that you may have.
- Take care of your home whether it’s making repairs or even selling it;
- Select assisted living or nursing home without becoming personally responsible for those bills;
- Withdraw funds from your retirement accounts, annuities, bank accounts to use this money to pay your bills and make sure your needs are properly handled;
- Make investment decisions;
- And generally take care of any issues that may arise not specifically related to your health care.
There are many names for this form, they include: General Power of Attorney, Durable Power of Attorney, Financial Power of Attorney, and more
You can write a power of attorney form that is effective as soon as you sign it. Or you can require that you are incapacitated before your trusted person can act on your behalf.
Advance Medical Directives – What are they and why do I need them?
An Advance Medical Directive is used for your trusted person to make health care decisions on your behalf if you are alive and unable to make or communicate your health care decisions. This form gives your trusted person the authority to make simple everyday decisions as well as end-of-life decisions. The most important part of this form is that you waive HIPAA with respect to your person so that he or she has access to your medical records and your doctors and other health care professionals who will be able to share information and choices.
The Power of Attorney form also has many different names these includes but are not limited to:
- Health Care Directive
- Living Wills
- Advance Medical Directive
- Durable Power of Attorney for Health Care.
Also, like the Power of Attorney form you can direct that is effective immediately or require that you be incapacitated in order for your decision-maker to be permitted to act on your behalf.
Last Will & Testament – What is it & How Does It Work?
A Last Will and Testament is a written document that states who will receive what you own at the time of your death. The will must be a typed document signed by you and two witnesses who are in your presence. It need not be notarized. You can be as specific as you want in disposing of your belongings and your assets. For example, you can give your cowboy boots to your childhood friend, $2,000 to your neighbor, and the remainder of your assets to your children in equal shares.
The Will also states who you want to wrap up your affairs, and you can include who will raise your children until they are the age of eighteen. And how the money you leave your underage children will be managed on their behalf.
It’s important to know that if you jointly own something or you have added a beneficiary to an account, the will cannot give those things away at your death. A beneficiary designation trumps the will and a joint owner becomes the sole owner at your death.
The will can be changed anytime while you are alive. However, after you have passed away, the will cannot be changed and must be presented to the Register of Wills so that the probate process can begin.
Conclusion: The Importance of Having Written Documentation
The advantage of having these documents in place is that if you need some help while you are alive, you have clearly stated who you want to manage your affairs. And if you have these three documents properly signed and stored where they can be found, then you have made it clear to all – whom you want to be in charge of your affairs and whom you want to receive what you have.