Don’t let your eyes glaze over yet! This shit is really important, and we’re going to do all we can to make it interesting.
With some basic planning, you can provide for your loved ones in the worst case scenario. “Estate planning,” an umbrella term, can help you direct exactly what happens with you, your loved ones, your money, and your things in the event of your incapacity or death.
Every person can benefit from a basic plan that provides peace of mind for you and gives your loved ones what they need to know if you cannot tell them.
Usually people think that an estate plan requires an attorney and a lot of money. While an attorney will be able to give you comprehensive advice and documents unique to you and your situation, it need not be expensive. And you do not necessarily need an attorney for many of the documents that can help in tough situations. These documents are also a great place to start if your partnership is not legally recognized where you live. You can essentially make a contract between you and your partner to give each other some rights that would otherwise be automatic if your marriage were legally recognized.
This overview is meant to be general information and applicable for wherever you are. For your specific situation, check your local legal help society, inquire at your bank, or ask your doctor.
Wills: for more than just post-dead-times!
The first thing people tend to think of is their “last will and testament” that says who gets their stuff when they die. However, a will is an extremely powerful and versatile document that can do so much more. A last will is valid only when you die. This document lets you decide who (or what) gets your money, your vinyl collection, your blog, or your pet cat when you die. If you have children, this is also the place to say who will take care of your child — if your spouse is a step-parent to your child, this is a MUST to make sure the logical transfer of care happens and that your spouse takes care of your child.
Healthcare power of attorney(POA)/Living will/Advance healthcare directive: Sign all the forms!
Whether you realized it or not, you likely filled out one of these forms if you underwent any major surgery. Hospitals make people fill out this form so they know what they can or cannot do if you cannot make your own healthcare decisions. The healthcare POA is valid only while you are alive and cannot make your own decisions related to healthcare. This is where you tell your doctor that you do not want to stay on life support, or that you do want painkillers if you have a terminal condition. Here, you can also say what kind of funeral or body-handling you want in the case of your death — likely this is the only document around when you die.
The healthcare POA is one of the easiest plans to make, as many are forms where you check boxes and fill out a questionnaire to indicate your preferences. Once made, give copies to your decision-maker (patient advocate) and your doctor, and bring it with you to the hospital if you are having surgery.
Durable power of attorney: who signs your checks and steps in your shoes?
Durable power of attorney is one of the most confusing parts of your estate plan, and it is also extremely powerful. While you are alive, you can designate someone (your “agent”) who can do things and make decisions on your behalf. This document lets you decide who can sign checks for you, participate in legal matters, or do practical things like pay bills and negotiate contracts on your behalf. Everything your agent does for you is only what they know you want them to do. However, because this document allows someone to “step in your shoes” to act as if they are you, this is not a document to be made lightly, and should be as specific as possible.
Trust: Like being a zombie, but less creepy
Often called “the hand from the grave,” a trust gives you control of your property, and is valid while living or after you die. Trusts are often used to direct how someone is allowed to use or manage your property. Trust fund kids are really just people who get income from some account which is not controlled by themselves, but by a trustee who manages the money for that person. You can set up a trust to benefit yourself, your family, your pets, your business, or a charity.
This document is extremely flexible and treated a bit differently everywhere, so this is one document to consult with your attorney.
These documents are the basic documents of many estate plans. There are more, but they are more complicated and are not legally binding everywhere. Document titles may differ depending on where you live. For legal advice, seek an attorney.