What Are the 5 Most Important Estate Planning Documents?

Estate planning is a legal process that allows individuals to create plans for their future in case something happens to them. An estate plan outlines critical information, including an individual’s final wishes and how assets should be divided. When creating an estate plan, it is important to include all of the essential documents and information needed to ensure your wishes can be carried out correctly.

Five Fundamental Estate Planning Documents

A well-crafted estate plan includes important information that can assist both you and your family in the future. These are some of the most common, and most important, documents that you can include in your own estate plan.

A Will or Trust

Every estate plan includes some form of will or trust, as they are one of the main elements of any plan. There are a variety of wills and trusts that you can choose from, depending on what you think works best for your situation. One of the most common kinds of wills is known as a “last will and testament.” This kind of will details:

• The executor of the estate plan
• The executor’s powers
• Your beneficiaries
• How you want your assets divided
• Any guardianship designations

In many cases, people decide that creating a trust may be better for their own unique circumstances. The most common type of trust in an estate plan is known as a “revocable living trust.” With a living trust, assets are added while the creator is still alive and responsible for them. After the creator passes, the assets are then transferred to beneficiaries by a designated trustee. Trusts are most commonly used for larger, more complex estates, and they also allow families to skip the probate process.

Designated Beneficiaries

If you create a will, you will most likely detail all of your beneficiaries and your assets within that document, unless you’d like to transfer them outside of the will. If you create a trust, you may still need to create a list of beneficiaries for other assets, depending on what is in the trust and what is not.

For assets such as 401k plans and insurance plans, adding a main and contingent beneficiary is critical to ensuring your assets go to who they are intended for. If you do not have beneficiaries listed for your important assets, the court may take over the process of dividing them instead.

Durable Power of Attorney

A durable power of attorney is a document that gives another person, known as an agent, the ability to act and make decisions for you if you become unable to. This kind of power of attorney gives the agent the power to make financial transactions and legal decisions for you. In most cases, an individual gives their spouse durable power of attorney because they already act together for most decisions anyway. Without a durable power of attorney, the court may take over the process and make decisions on your behalf—which is not always ideal.

Healthcare Power of Attorney

A healthcare power of attorney is another form of POA that grants an agent the ability to make decisions and act on your behalf. Unlike a durable power of attorney, which focuses mostly on finances, a healthcare power of attorney gives an agent the ability to make important decisions related to an individual’s healthcare and treatment. Your agent should be aware of your healthcare preferences, if you have any, so they can ensure they make proper decisions for you in the event you become incapacitated.

Letter of Personal Intent

A letter of personal intent is a document left for the executor of a will or the beneficiary of a trust. A letter of intent can detail a variety of aspects, depending on what the creator of the estate plan has left to address. The creator can outline more wishes on what they want to happen with certain assets, personal wishes, special requests, and sometimes even funeral arrangements. Including a letter of intent in your estate plan is always helpful, especially so you can ensure you have addressed all topics that are important to you.

FAQs

Q: How Old Should You Be When You Start Estate Planning?

A: It is never too early to begin estate planning. For many people, having children is a milestone that makes them take the first step towards estate planning. This is because, in case something were to happen to them, they want to make sure their children will still be taken care of.

Q: How Can a Lawyer Help With Estate Planning?

A: Finding an experienced estate planning lawyer can help you immensely. They can help you choose and fill out documents that are right for you and your situation. They can also assist you throughout the planning process and ensure that everything is done properly. Your lawyer can also be named the executor of your estate.

Q: Do Assets in a Trust Go Through Probate in California?

A: No. Assets that are put into trusts are not subject to the probate process in California. This means that once the creator of the trust passes, the beneficiary can immediately transfer the assets involved. This applies to both revocable and irrevocable trusts, although you will not be able to control an irrevocable trust while you are alive.

Q: What Happens If I Don’t Have an Estate Plan?

A: Without an estate plan or even a simple will in place, you will be considered to have died “intestate.” The process of asset division will then be handed over to the state. This means the court will ultimately decide who receives what assets and how they will be passed on based on inheritance legislation.

Estate Planning Assistance

When it comes to estate planning in California, having an experienced attorney that you can count on can make a big difference in the overall process. Our team at Robert G. Petrovich, Attorney at Law, is dedicated to helping clients create estate plans that outline their unique wishes and bring them peace of mind. We understand how intimidating a process like estate planning can be, which is why we are here to assist you throughout the process. To learn more about how we may be able to help you, contact our team today for more information.