Essential Estate Planning Documents

When most people think of estate planning, they are either not sure what it includes or believe it is just creating a will, but this is not the case. Estate planning is a legal process that protects an individual’s assets and defines the financial dispensation to one’s spouse, children, or other family members. Estate planning also involves permitting family members or an attorney to carry out your wishes if you become incapacitated while still alive.

Every person can benefit from ensuring their assets and finances are properly taken care of after their death. In this post, we will discuss several of the estate planning documents you need to start your estate planning process. Your foundational estate plan will likely include the following essential legal estate planning documents.

Last Will and Testament

This document allows you the power to decide what is in your children’s and pets’ best interests. If a person dies without a will, an heirship determination may be required before appointing an administrator. Absent a will, the state of Texas has preset decisions as to who will inherit your property and may lead to the unintended distribution of assets. A will explains and clarifies what you want to happen with your estate at the time of your passing, such as property, money, etc. Your will should also name who you want to be the executor, the person who will be in charge of following and carrying out your directions. Make sure this is a person you trust to carry out your wishes.

Financial Power of Attorney (POA)

A financial power of attorney is a revocable document that allows you to name a person to act on your behalf—financially and legally—the ability to manage your assets. You select an agent who will act on your behalf during your lifetime if you cannot do so yourself. If you do not have a power of attorney designated, a guardianship may be required, and a court may decide on what happens to your assets if you are found to be mentally incompetent. A valid power of attorney is crucial to avoid the need for expensive and time-consuming guardianship should you become incapacitated.

The POA document can give your agent or assigned person the power to negotiate real estate, handle financial transactions, tax matters and make other legal decisions.

Financial powers of attorney come in two forms:

Durable Power of Attorney, which is in effect as soon as you sign it, and
Springing Power of Attorney, which only goes into effect after being declared mentally incapacitated.

Medical Power of Attorney

A medical POA designates an individual to make medical decisions if you can no longer do so. Health care or treatment decisions include the ability to consent to or refuse any treatment, service, or procedure to maintain, diagnose, or treat a physical or mental condition. A medical POA will focus only on health-related decisions and will be written according to the individual’s exact specifications making the directive. Typically, this is your spouse, but does not have to be. It should always be a person or agent that you trust to carry out your wishes, shares your views, and would recommend a course of action you would agree with. Finally, a backup agent should also be identified if your initial pick is unavailable or unable to act at the time needed. A medical POA is different from a Do-Not-Resuscitate Order.

Living Will

Texas recognizes an individual’s right to make decisions regarding his/her medical care, including administering, withholding, or withdrawing life-sustaining procedures. A directive to physicians, also known as a living will, contains a written set of instructions to your physician about receiving life-sustaining procedures if you have been diagnosed with a terminal condition, end-stage condition, or are in a persistent vegetative state. It also gives guidelines for your family members to follow if you become terminally ill. Using a directive may help provide an individual’s preferences for death and dying, avoid unwanted and unnecessary medical care and expense, and reduce family arguments since the principal had already expressed his medical care desires and no family member is required to make the end of life decision.

Declaration of Guardian for Minor Children

If you have minor children, you will also need a Guardianship Designation. Picking a guardian of their person and estate is vitally important. Ensure the guardian you choose is financially sound, shares your parenting views, and is willing to raise children.

If you do not have a guardian designated, a court could determine who your children live with, and biological parents have statutory priority.

Letter of Intent and List of Important Documents

A letter of intent is a document left to your executor or a beneficiary. The purpose is to convey your wishes and intent. Some letters of intent may also provide funeral details or other special requests that you may have. The document does not carry the legal weight of a will.

Make certain your family knows where to find all important documents and information. Make a list of documents, including location. Include papers for: life insurance policies, pension or retirement accounts, annuities, bank accounts, divorce records, birth and adoption certificates, real estate deeds, stocks, bonds and mutual funds, and all other important documents.

Prepare a list of debts, bills, and accounts, including contact information and account numbers for each. You should maintain a digital asset list to cover your electronic property, including your computer hard drive, digital photos, information stored in the cloud, passwords, cryptocurrency, and online accounts.