Estate Planning expert Julie Westbrock of Trust Point delves into three of the top estate planning documents to consider as you create your plan.
We’ll be breaking the video down below into specific points that you’ll be able to reference throughout your estate planning. As always, reach out to Trust Point with any questions you have about estate planning.
Here are the three estate planning documents you can’t live or die without.
Essential Estate Plan Documents
Health Care Directive
In the state of Minnesota, this document is referred to as a “Health Care Directive.” In other states, you may see this document titled “Health Care Proxy,” or “Health Care Power of Attorney.” This document aims to appoint a health care agent or someone who will make your health care decisions for you.
In most cases, this person is a close family member or trusted friend. It will not be a company or business such as Trust Point because a business won’t know you as well as friends or family members would.
Health Care Instructions
Within your health care directive document, you’ll add instructions about how your health care choices will be handled. Communications within the document can include whether you wish to have life-sustaining procedures, be an organ donor, and your funeral and burial wishes.
Financial (Power of Attorney)
This document allows you (the “principal”) to designate someone (the “attorney-in-fact”) to handle your financial matters. Again, in most cases, this will also be a family member or a close and trusted friend. But, unlike your health care directive, power of attorney could be given to a company such as Trust Point under specific circumstances.
The power of attorney may be effective immediately or upon incapacitation. When the effective period begins upon incapacitation, the process is referred to as a springing power of attorney.
This document will never take away the principal’s power to also manage their affairs. A power of attorney could be created with limited powers given or for a limited effective period. Note that all powers of attorney end upon death, which means that if you’re acting as an attorney and the owner passes, you no longer have authority over those assets.
The document following the passing of an individual is the estate, will, or trust document.
In a will, you will add instructions for what should happen after your death. These instructions should include:
- Who should receive assets and when.
- Who is responsible for administration – Personal Representative.
- Who should care for your children or dependents – Guardian.
Probate is required for all wills to go through. During the legal court process, these factors will be determined by the court system:
- Determine if the decedent’s will is valid.
- All of the descendant’s debts and expenses are paid.
- The decedent’s property will all be distributed after death.
A trust is slightly different from a will. A trust is a legal agreement that has three parties:
- Grantor/Settlor – the person creating the trust.
- Trustee – the person managing the trust property.
- Beneficiary – the person who receives the benefits of the trust property.
A revocable trust or living trust is a trust that can be revoked at any time. Within this document, you can say:
- Who receives assets and when.
- Who is responsible for administration – Successor Trustee.
Your successor trustee will also be able to step in if you become incapacitated.
Note that in order to avoid probate, assets must be titled correctly. Consider looking at a trust like a bucket. Your trust creates that bucket, and you then would need to place all of your assets within that bucket.
For example, you own real estate, and you’d like to include it in your trust. You’ll need to change the title. The home or property title will be changed from John Smith to John Smith as trustee of the John Smith Revocable Trust. Provided that you establish these titles correctly, your assets will avoid probate.
Thanks for reading through this list of the three estate planning documents you can’t live (or die) without. If this has been helpful to you or you have any more questions, please feel free to reach out to Trust Point today. We’d be happy to answer any questions you might have or help you get started on your estate planning documents.