Estate Documents that Everyone Should Have

Estate Documents that Everyone Should Have

“According to a new Caring.com survey, only 42 percent of U.S. adults currently have estate planning documents such as a will or living trust. For those with children under the age of 18, the figure is even lower, with just 36 percent having an end-of-life plan in place.”¹ Interestingly, most couples believe if they die without a will, the surviving spouse inherits everything, but this is only true in 16 states. For example, in Georgia, if you leave behind a spouse and children, the probate court divides the estate equally between them.²

Also, if you become disabled and cannot make financial or health decisions, your family must petition the court to appoint someone to make those decisions; in an already potentially stressful family situation, this cumbersome process adds more burden to the family, not to mention, often more cost.

Have These Three Estate Planning Documents

So, unless you want your state government to decide how to distribute your estate assets or to appoint someone to make your important decisions if you become disabled, you should have these basic documents:

  • Last Will and Testament

This document disposes of your property after you die; it is a multi-functional document that determines who is entrusted to carry out your wishes after your death (Executor/Personal Representative), names your beneficiaries and how to distribute your property (directly or in trust), names the guardians of minor children (if applicable), and names trustees if beneficiaries receive property over time through a trust.

  • Durable Power of Attorney

This document allows someone to step into your shoes to make financial decisions –as basic as paying your bills to as complex as selling assets or making gifts. Because the document is durable, the power of attorney will continue in the event of your incapacity or inability to make personal decisions. The document can require that doctors deem you incompetent for it to become effective (called Springing), but that is not necessary.

  • Healthcare Directives

This document is similar to a Durable Power of Attorney but for healthcare decisions. You can select a health care agent to make health decisions for you. Some states offer standardized forms outlining specific situations that you can address to help your agent make decisions in line with your treatment preferences.

Find an Estate Planning Attorney

When drafting your estate documents, we recommend choosing an attorney that specializes in estate work. The laws and regulations are ever-changing and you will want to have properly drafted documents to take advantage of any structures that are available to benefit your family’s specific needs now and in the future. Provide the attorney with a basic personal financial statement so they can understand who owns which assets and can make recommendations accordingly.

Identify Secure Storage

After you have signed your documents, what should you do with them?

  • Last Will and Testament

Some estate attorneys prefer to keep originals, but if you have the originals, keep them in a fire-safe vault at your home or in your safety deposit box. Tell your loved ones where your will is located in the event they need to find it. Make copies of your will – for your financial advisor, for your Executor, and your personal records. Put a note with the copy of your will, telling your loved ones where the original is located – probate court requires originals.

  • Durable Power of Attorney

Keep multiple copies with your personal records. Provide a copy to your wealth advisor to keep in his or her file.

  • Healthcare Directives

Keep multiple copies of it with your personal records too. Provide a copy to all of your physicians, your agents, and your wealth advisor to keep in their files.

Review Your Documents Regularly

Remember, don’t just file away your estate documents and forget them. As your net worth changes, your family changes (marriage, divorce, births and deaths), and estate tax legislation changes, you should review your estate documents to ensure that your wishes are still met with the existing documents.

Explore Advanced Estate Planning Options

Of course, the higher your net worth, the more complicated and tax-driven your estate planning may become. You may have other potential options to reduce your estate expenses, such as:

  • Owning real estate outside of your state of residence inside a revocable trust to avoid extra probate;
  • Including credit shelter trusts (or bypass trusts) in your will to minimize estate tax at the death of the second spouse;
  • Including marital trusts (especially after a second marriage) that outline the disposition of your assets at the death of the surviving spouse;
  • Using certain trust language within your will to minimize the tax of your estate in future generations (generation skipping tax).

Discuss these options with your wealth advisor, your estate attorney, and your CPA to see if they are a good fit for your financial situation. Ultimately, you want to maximize your wealth transfer to your heirs and minimize the complexity and the tax associated with that transfer.


References:

¹DiUlio, Nick. “More Than Half of American Adults Don’t Have a Will, 2017 Survey Shows.” Caring.com, Caring.com, 15 Aug. 2017, www.caring.com/articles/wills-survey-2017.

²Garber, Julie. “Who Inherits in Georgia When There’s No Will?” The Balance, DotDash, 2 Feb. 2017, www.thebalance.com/dying-without-a-will-in-georgia-3505047.

Author: 

Amy Merrill is a Wealth Advisor at TrueWealth, LLC, a wealth management firm located in Atlanta. She has extensive experience spanning 20+ years in financial planning for corporate executives and directors. She can be reached at amerrill@truewealth.com or 404.487.0503.

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