Estate planning is so important because it legalizes all of the most important decisions you can make regarding your family and property once you are gone as well as how you want to be cared for in an emergency.
Here are the estate planning documents you probably need.
First, you need the document that is most commonly thought of: your will. It is exactly as it sounds, what you “will” or want to happen with your things after you die.
A will has other purposes too. It can include a springing trust to ensure the person who inherits has restrictions on what they receive. The most common use of this is for children or grandchildren. Children cannot inherit but the trustee can manage the funds on their behalf. Even for young adults, you may want to manage things on their behalf so they do not burn through it. Better to use it for a reasonably priced car, education, a first home, wedding, moving for a job.
Through a will, you may also want to decide who acts as your children’s guardians or conservators, managing their money.
In your will, you can also dispose of tangible property, make plans for your funeral and decide who will be the personal representative to handle estate administration after you die.
Next, you need a LIVING WILL, MOST document or other advanced medical directive to make decisions before you die. These include whether you get a breathing tube or whether you become an organ donor. This is a very personal choice, and you need to think it through.
Warning: Think twice before you sign an advanced medical directive a hospital shoves in front of you as part of your admission. Carefully look it over. It will void other documents, so you need to understand what you are signing. I suggest going over it with an attorney if at all possible.
Medical Power of Attorney and Financial Power of Attorney
You should also have a Medical Power of Attorney and a Financial Power of Attorney. It is critical that you appoint an agent you trust. Of all documents abused in the law, these are the ones I have most frequently seen abused and manipulated. Do not sign these over lightly.
Some people also need a TRUST. This is a sophisticated document that must be drafted carefully. Living Trusts are necessary if, for example, you own real estate in more than one state. You do not want to do probate in two states.
The biggest problem I see with trusts is that people do not convey their property into the trust. This can be a hassle but it is absolutely necessary for the trust to be effective. You need to make sure your real estate is deeded to the trust and that your trust is the beneficiary of retirement and other accounts. You can have a pour-over will to make sure you are covered if this does not happen, but you must do it. I really want to make sure my clients do this as I want that trust to be effective.
If you know my practice, you know I encourage people to do their own legal work to the extent possible. But NOT for these documents. As mentioned, I have yet to see an “online self-written” will done right. Please consult with an attorney for this important step in wealth building and wealth management. It is too sophisticated for cutting corners.
If you have questions or need to prepare your Colorado estate planning documents, contact me today at the Andersen Law PC office at 720-922-3880 or on my cell at 303-808-4794.