Most people are familiar with the concept of a testamentary will, dictating how you want your assets to be handled and divided in the event of your death. But they may not be aware that there are other testamentary documents that you should have in place, such as power of attorney documents.
What are the most important testamentary documents to have in place?
And how do you create them?
The First Step: Hire an Estate Planning Lawyer
If you feel in over your head and you aren’t sure which testamentary documents you need or how to get them, your best bet is hiring an estate planning lawyer. Your estate planning lawyer is going to help you understand the laws in your area, the options available to you, and the best course of action to make sure your estate is handled according to your wishes, after your death.
This way, you'll get expert advice on how to manage your estate, you'll get thoughtful and accurate answers to all your questions, and you'll have peace of mind knowing that all of your documents have been completed and filed appropriately.
The law can be complicated, and planning your testamentary documents can be even more complicated, so it’s unwise to travel this path alone.
The Most Important Testamentary Documents
These are some of the most important and common testamentary documents that you'll need to consider. However, you may not need all of them in place:
· Your last will and testament. Your last will and testament is a formalized document that allows you to decide how you want your assets to be distributed after your death, and after any necessary payments of your debts and last expenses. Without a will in place, you’ll die “testate,” which means your estate will be divided in accordance with local laws. This may or may not align with your vision for how you want your assets to be distributed, so it's important to have a specific document in place. In your will, you can also dictate who you want to be the guardian of your minor children. You must also decide on an executor of the probate estate, who will act as your representative in overseeing distribution. Do note that you're able to revoke or change your will at any time, so long as you do so in sound mind and according to the legal requirements as they apply in your area.
· A codicil (if necessary). A codicil is the term for a formal amendment to your will. In some cases, it's better to redraft the entire will from scratch. But if you're only making minor changes, or a circumstantial change, this is a much easier option.
· A living trust. A living trust is a type of legal arrangement that helps you decide how your assets are to be managed and distributed. This applies, as the name suggests, both during your lifetime and after you die.
· A living will. Similar to your last will and testament, a living will expresses your wishes for how certain matters should be handled. The difference is that a living will dictates your wishes concerning medical treatment in the event you can no longer express informed consent independently.
· Other contracts. In some cases, you may wish to distribute some of your assets according to a contract, rather than via your will. For example, if you have an insurance policy or a retirement account that designates a person as a beneficiary, this contract will apply.
· Buy-sell agreements. Some individuals may want to establish buy-sell agreements, dictating the purchase, sale, or other meaningful action of assets or interests like corporate stock. If you plan this type of arrangement, you'll get to decide whether to set the price for this exchange or determine the price based on a specific methodology.
· Power of appointment. Power of appointment is a specific estate planning tool that allows you to give another person in your life the power to determine how some of your assets are distributed, either to a restricted pool of candidates or in an unlimited capacity. For example, you may give the power to appoint to your daughter, giving her authority to decide how some of your assets are divided among your grandchildren.
· Power of attorney.Power of attorney (POA) allows you to give power to another person to act on your behalf if you’re no longer in a position to make those decisions completely independently. There are many different types of power of attorney that can be conferred, including medical power of attorney, which grants a person the right to make medical decisions on your behalf, and financial power of attorney, which grants a person the right to make financial decisions on your behalf.
Regardless of how many assets you have, or what your vision is for how your end of life is going to be handled, almost everyone can benefit from spending some time getting their testamentary documents in order. If you haven't done any estate planning yet, consider hiring an estate planning lawyer so you can get started on this important responsibility.
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