Documents to Demystify the Estate Planning Process

Just as there is a natural aversion to planning for retirement, so, too, are many reluctant to address estate planning. There are better ways to spend the day than confronting one’s own mortality. The seemingly complex process, too, may be enough to encourage people to put off estate planning for another weekend.
But deep down, we know how important it is. One avoids estate planning not just at your own peril, but of your loved ones as well. If you die without a will, for example, it is the state that decides how to distribute your assets.
Demystifying the process is the first step to overcoming reluctance to get the ball rolling. The more prepared you are before contacting your attorney or hiring a professional the better. Here are some of the basic documents about which you need to know.
First is the will, which will carry out your wishes in the distribution of your assets to family members and other beneficiaries upon your death. An executor is charged with distributing your assets. The will must be filed in probate court. Probate is a judicial process for managing your assets in the case of death or if you become incapacitated.
Another recommended document is a power of attorney, a legal document in which you name another person to act on your behalf should you become incapacitated (a will only takes effect after you die). Choose wisely as this person will be able to sell, invest, or spend your assets.
A health care power of attorney authorizes someone to make medical decisions for you in the event you are unable to do so. A living will, likewise, expresses your intentions regarding the use of life-sustaining measures in the event of a terminal illness.
A revocable living trust allows you to provide for continued management of your financial affairs during your lifetime, upon your death, and even beyond for generations to come. It also allows you to amend or revoke the trust during your lifetime. Trust assets are protected from probate. A revocable trust normally involves three parties: the grantor, who creates the trust and transfers assets into it; the beneficiaries, and a trustee who manages the trust assets.
These are the basic essential documents you are most likely to need as you get into the estate planning process. It is advised to periodically revisit and update your estate plan in case there is a change in the named individuals such as by birth, death, marriage, divorce, or, just a change of mind. Unfortunately, this does not seem to be a priority in Mass Affluent households, where, according to Spectrem Group research, 91 percent had not updated their estate plans. It was more of a priority in the higher wealth levels. Twenty percent of Millionaire households updated their estate plans, along with 31 percent of Ultra High Net Worth investors with a net worth of over $5 million (not including primary residence), and 38 percent of households with a net worth of $25 million and up (NIPR).
Just as essential is a qualified professional who will demystify and guide you through the process to ensure that your assets are protected and administered according to your wishes.