No matter the size of your estate or the complexity of your circumstances, it is important to have the proper estate planning documents in place to protect you, your family and your assets.  Unfortunately, many people fail to have any plan in place, and even if they have something, they are often outdated, incomplete or no longer reflect their wishes.  Having the proper estate planning documents in place at the time of serious illness or death avoids uncertainty, which can create conflict among family members from which they may never recover.

Below is a list of the key documents you should have in place so that you are certain your wishes are clear, legal and understood by your family members.

1.  Beneficiary Forms. Beneficiary forms provide who is entitled to the assets in your 401(k) plan, IRAs, life insurance policies and other types of bank and brokerage accounts upon your death.  If you are married, your primary beneficiary will most likely be your spouse.   If your beneficiary dies before you, it is important to remember to update your beneficiary designation (but don’t designate a minor child as a primary or alternate beneficiary – this can lead to problems).  Your beneficiary designations trump any directives stated in a Will.  For example, if you list your son as the beneficiary on your life insurance policy but in your will you state that you want the life insurance policy proceeds distributed among all of your children, the son designated as the beneficiary on the insurance policy will receive the life insurance policy proceeds.  This type of situation can cause conflict among the family so be certain to keep your beneficiary designations updated.

2.  Last Will and Testament. Your Last Will and Testament is one of the foundation documents of your estate plan.  The Will outlines the detailed and specific instructions on how you want your assets distributed upon your death and who you want to be in charge of administering your estate.  This document can be very simple or highly customized to meet your unique needs.

3.  Revocable Living Trust. The revocable living trust is the most common document used in estate planning after a Will.  Similar to a Will, a living trust details how you want your property and funds distributed upon your death.  It also allows you to maintain control of your assets while you are still alive.  During your lifetime, the creator of the trust will usually act as the trustee.  The trust will appoint a trustee to carry out your specific wishes for your assets upon death.  The biggest differences between a living trust and a Will is that (i) the trusts owns your assets during your lifetime, and can be managed by someone else should you become disabled and (ii) any assets you hold in a trust at the time of death do not have to go though probate in Court (which can be costly and take many months) and the information about your estate, including your net worth, become available to the public.

4.  Durable Power of Attorney. The Power of Attorney is crucial to the management of your financial assets while you are alive.  A trusted individual is selected to act on your behalf should you be unable to do so due to mental or physical incapacity.  Having this document in place avoids the need for appointment of a guardian should you become mentally or physically unable to take care of your affairs.

5.  Health Care Proxy. This document names an individual to make decisions associated with medical care if you are unable to do so due to an accident or otherwise.  A health care proxy will reduce the likelihood of family conflict, as well as the need for court intervention in making health care decisions.

6.  Living Will. A Living Will is a document that lets you state your wishes for end-of-life medical care, in case you become unable to communicate your desires. A Living Will can give invaluable guidance to family members and healthcare professionals if you can’t express your wishes. Without a document expressing those wishes, family members and doctors are left to guess what treatment you prefer. They may end up in painful disputes, which occasionally make it all the way to a courtroom.

Estate plans are essential for everyone.  Do yourself and your family a favor and make sure you have the proper estate planning documents in place now so you can avoid family disputes in the future.

For more information on creating an effective estate plan, read our post on the Ten Most Common Estate Planning Mistakes.

If you are interested in learning more about designing an estate plan that is right for you, please contact our office at 631-777-2401 and schedule an appointment to come in for a consultation.