How does estate planning protect my family?
Estate planning is something everyone might want to consider once they turn 18 years old. Whether you have accumulated substantial wealth or only a few assets, it’s never too early to set your family up with everything to move forward if something were to happen to you.
It can be incredibly difficult for families to figure out legal and financial issues while dealing with the emotional stress of losing a loved one or coping with their hospitalization. Having a plan in place can relieve some of that potential burden and stress.
An estate plan may include details for what you want to happen if you become medically incapacitated. Your plan also addresses issues surrounding decisions after death, including how you want your assets to be distributed or how you want your family to handle your burial or funeral.
What are the three most essential estate planning documents to protect my family?
An estate plan protects your final wishes and puts a plan into place for the distribution of your assets in the way you want them.
A proactive approach can go a long way toward making a difficult situation easier for the loved ones you leave behind. This is especially true when the right documents are in place to ensure minor children are taken care of and surviving family members know what to do, or what you want them to do for you.
A thoughtful, complete plan can lighten the burden your family members might experience after your passing because it greatly simplifies the probate process. The right estate documents can also be made with tax planning in mind to get ahead of issues like estate and gift taxes.
Last Will and Testament
A Last Will and Testament is the best way to put your final wishes in writing. With a Last Will and Testament, often just called a Will, you decide how to distribute your property and assets, along with any other beneficiary designations you want to make.
Your Will provides an outline to how you want to distribute your home, bank accounts, other real estate assets, life insurance, retirement accounts, art, collections, or anything you own. Your Will can name a guardian to take care of your minor children or other dependents, along with any other special directives. A big benefit of having a Will is that it makes the probate process much simpler for your family members, which can save them time, money, and frustration.
Living Will
A Living Will is similar to an Advance Directive, and in some states may be the same document. It can allow someone you name to make critical healthcare decisions for you when you cannot make them yourself. This can be incredibly helpful to your family if they find themselves in that difficult situation. Knowing what decisions a person wants made can make it easier for spouses or family members to carry out those wishes, even if they are difficult.
When preparing a Living Will or Advanced Directive, it can be difficult to think about the decisions you would like made on your behalf. Making those decisions yourself, however, is a simpler task than asking your loved ones to make them for you.
Power of Attorney
A Power of Attorney (also known as a POA) gives legal permission to someone else to act on your behalf if you're unable to write checks, sign official documents, or handle other legal matters and potentially medical decisions too.
You don’t have to choose the same person to handle all of your matters. There are several different types of POAs, including a Durable Power of Attorney and a Special Power of Attorney. For instance, you can name one family member in your Medical Power of Attorney to follow your directions regarding medical care, long-term care, or any end-of-life decisions you’ve made. You can then name a different individual in your General Power of Attorney to act on your financial affairs and make financial decisions. Some business owners use a POA to elect someone to sign legal documents or write checks for them if they were to become unable to do so themselves.
Can I make estate planning documents online?
Yes, you can make a variety of estate planning documents online. Most states, however, require these documents to be signed on paper in front of witnesses, a notary, or both. Regardless, many people find preparing their own documents online to be an easy way to get them written. Rocket Lawyer members can have their documents reviewed by a network attorney to make sure they follow state laws, and can get advice about how their documents must be signed.
Which additional estate planning documents are important for parents?
As a parent, you want to make sure your children are taken care of in the event something unexpectedly happens to you. In addition to obtaining some form of life insurance coverage, other estate planning documents you might want to consider include:
- Power of Attorney for Child.
- Revocable or irrevocable trusts.
It is a good idea to go through all of your accounts and update your beneficiaries to include your children. This way, there can be no question about who you want your accounts transferred to. You also might want to consider adding other family members as contingent beneficiaries.
When might parents consider talking to their children about their estate plans?
Discussing death or incapacitation is never an easy topic. This is especially true when it comes to discussing such matters with your children. However, it’s become very common for parents to include their adult children in the planning process. Minor children are typically not part of the discussion, except perhaps to reassure them they’ll always be taken care of even if you can’t be there.
It’s a good idea to wait until your children are at least 18, if not in their 20s, before disclosing your estate plan. Some parents opt not to tell their children that an inheritance is coming because they don’t want them to rely upon it as they begin their own adulthood journey. If this is the case, you can let them know you have documents in place and what types, such as any retirement plans, life insurance policies, IRA accounts, annuities, or safe deposit boxes.
If your children are mature enough, you can consider including them in your personal finance decisions. You may also want them to have a role in your healthcare planning so they know what to expect. Taking over a parent’s decisions is a difficult time and by making them aware of your plans you can ease their burdens.
If you have more questions about starting or updating your estate plan, reach out to a Rocket Legal Pro for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
