Planning For The Inevitable: Estate Documents You Needed Yesterday

Estate planning can be a difficult topic, but a necessary one. Learn the basic estate documents everyone should have in place.

One of the most difficult conversations I have with clients is about their estate plan. It is a topic that forces us to face our mortality, and accept that world will continue to turn after our death. Crafting an estate plan allows you to be sure your wishes are fulfilled, even after you have died. There are some basic estate documents that everyone needs to have in place. There are others that you may need depending on your unique circumstance. You should speak with a qualified financial planner or estate attorney to determine any additional documents you need to have.

Last Will and Testament  The will is a legally binding document that outlines where your assets go after your death. This is where you decide who gets your prized baseball card collection, the Corvette, and your home. This is also where you decide who will become your children’s guardian (also called a Nomination of Guardianship provision), and who will be in charge of managing your estate (ie. Executor). You can also attach a non-legally binding letter to the will called a Letter of Last Instruction, which allows you to outline wishes for things such as your funeral, do you want to be buried or cremated, and more.

Powers of Attorney (POA) – There are two primary types of POA; Healthcare and Financial. These documents let you to decide who will make medical and financial decisions for you in the event that you are not capable of making decisions yourself. The same person does not have to be the POA for both; it may be advisable to have a different person serve in each capacity. An important point is that you name a contingent POA should the primary POA be unwilling (or unable) to serve. For example, if you name your spouse as your primary POA and you are both in a car accident, who would you want to make medical and financial decisions for you?

Living Will – This document outlines your desires for medical treatment in the event of scenarios such as being in a permanent vegetative state, terminally ill but still strong, or imminently dying. You might remember Terri Schiavo, a young woman whose family fought a very public court battle on the decision to keep her on life support many years after an accident left her in a vegetative state. If she had a living will, her family would have known her wishes. Unfortunately, after the accident is too late to make your wishes known.

Ethical Will – Estate documents tend to be very cold, harsh writings, full of legal jargon. Although they may outline the what of your wishes, they don’t usually outline the why. The ethical will gives you the chance to tell your story without all of the lawyer talk. This document can be anything you want it to be, and is your opportunity to tell people what you want them to know after your death. This might be a general letter of life lessons you learned or an explanation of why you left your money to charity instead of your kids. One man wrote a letter containing advice learned from 90 years of life experiences to his 4-year-old great grandson to be opened on his 20th birthday. It could be an audio or video recording, a book, or pictures. It can be anything that allows you to tell your story.

Although thinking about your death is not a happy topic, it is something that must be thought through. Do not leave your family without guidance on what your wishes are. Court battles, strained family relationships, guilt, and more can be avoided by drafting these basic estate documents.

Do you have these documents in place? If not, is there a reason?

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Alan Moore, MS, CFP® August 17, 2012 at 12:41 PM
Thank you for the great comments Dick. I have a future post coming about where to actually store your estate planning documents, so I appreciate you bringing up that point as it is incredibly important. I agree that giving away keepsakes while alive may be preferable, but unfortunately we just don't know when we might die so we can try to give them away, however need to have a plan in place in case we die suddenly. Thanks for the comments!
Mike B August 17, 2012 at 04:28 PM
Are there recommended online places you can create some of the documents for free to at least get started? And can then take those documents to a lawyer to make any changes and finalize them to make everything official and good to go?
Alan Moore, MS, CFP® August 17, 2012 at 04:40 PM
Mike, great question! The Wisconsin Department of Health Services has created fill in the blank POA's and Living Wills. They can be found at: http://www.dhs.wisconsin.gov/forms/advdirectives/ADFormsPOA.htm From my experience, most estate attorneys prefer to use their own document templates than editing ones you already have. It can actually be a lot faster for them to use language they have written and already know as opposed to going through and reading documents written by you (or even another attorney). That being said, each attorney is different so I recommend contacting a few and seeing what they say.
Scott Berg August 17, 2012 at 05:57 PM
Mike B - I'm not an attorney, but I can relate my own personal experience. Wisconsin is a community property state. If you plan to leave everything to your surviving spouse, you're already set even without a will. It's when you're single, if you and your spouse die at the same time, or when you want something to go to someone else that it gets complicated. Providing for minor children can be tricky - that's why I have a will written by an attorney. And, the more money you have, the more there is to fight over and the bigger potential for nastiness by surviving relatives and friends. Plus, remember life insurance is instant cash and goes to the person(s) listed on the policy. Lawyers make their money writing custom documents like wills tailored to your specific needs. They can also take a simple situation and milk it for everything it's worth, taking a standard form, filling the blanks, and billing like they did a zillion hours of work just for you. By all means, shop around!
1040law August 18, 2012 at 10:20 PM
Today, one of the most important elements to address are the digital assets of an individual and the passwords for such. There should be a list of passwords kept somewhere safe (safety deposit box? lock box?) This would include such things as email accounts, online subscriptions, online banking, bonus points of various corporate institutions and the like. The authority for accessing should be granted in both the power of attorney and the will or trust.


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