What Documents Should Your Estate Plan Include & Why?

Dec 6, 2022 | Estate Planning

An estate plan is a collection of legal tools that lay out exactly how your wealth should be managed, both now and in the future. Think of it as the most effective way to get your affairs in order and ensure that your legacy is preserved in the way you intended! Many people procrastinate creating an estate plan because they think they’ll have more time later on in life, or they are intimidated by how complex and emotional the process may be, but no one is guaranteed tomorrow. Passing away or becoming incapacitated without an estate plan in place could leave your family in a difficult position. 

If you ask the average person what legal documents they should have in their estate plan, they may think that all they need is a will. However, while having a last will and testament is definitely important, a will alone can’t completely protect your assets and your loved ones. Here are several other documents that your estate plan should include and why! 

A Living Will (Also Known As An Advance Directive) –

What It Does: This estate planning document clearly states your wishes for what medical decisions should be made on your behalf if you are unable to make them for yourself. Should you become incapacitated, your doctors and your family members will all know without a doubt what you would have wanted them to do.

Why You Should Have One: A last will and testament can clearly state your wishes for who you want to inherit your possessions, but it only goes into effect after your death. This type of living will can be effective whenever it needs to be used, and can save your family from tremendous amounts of stress and even fighting among themselves. 

A Trust (Or Multiple Trusts) –

What It Does: A trust owns your assets in an entity outside of your name. You create the trust and become the “trustor” or “grantor”, and designate someone known as trustee who can manage the property in the trust for the benefit of a third party known as the “beneficiary”. In some cases, you can act as all three parties. 

There are many different types of trusts, including revocable trusts (the terms of which are flexible and can be changed over the course of your lifetime), irrevocable trust (inflexible terms that once set, are set in stone), Medicaid planning trusts, special needs trusts, and more. Different types of trusts offer different levels of protection and other benefits. Trusts go into effect upon creation, and can stay effective after your death. 

Why You Should Have One: A trust is arguably the most estate planning document that you can have in your plan. Besides offering strong protection from your assets against creditors, unexpected life events like illness or divorce, and government financial aid programs like Medicaid, trusts can also byass probate upon your death (an expensive, burdensome Pennsylvania court process that your family would otherwise need to navigate). Having a trust saves your loved ones time and money and can make a difficult experience much easier on them. 

A Durable Power Of Attorney –

What It Does: This estate planning document gives someone else that you trust the authorization to make legal and financial decisions on your behalf if you become incapacitated and cannot make them for yourself. You can determine the scope of their authority.

Why You Should Have One: If you can’t make decisions on your own, your loved ones will have a lot of practical matters to attend to; the upkeep or sale of your property, the management of your assets (particularly if you have investment properties or own a business), legal paperwork to fill out, etc. Just like a living will, this document gives you the power to put a person of your choosing in charge, which can increase the likelihood that the decisions made will be ones you would have approved of. 

A Healthcare Power Of Attorney –

What It Does: This estate planning document functions similarly to a durable POA, except that it gives someone that you trust authority to make medical decisions on your behalf. It can work in conjunction with a living will/advance directive.

Why You Should Have One: You can’t always predict every future scenario, particularly when it comes to your health. Having this tool in place covers all of your bases by allowing a trusted family member or friend to act for you and hopefully, align decisions closely with your values and wishes (rather than a medical team that doesn’t know anything about you or your history). 

Beneficiary Designations –

What They Do: Naming one or more beneficiaries on your accounts, such as retirement accounts, bank accounts, life insurance policies, annuities, etc. will ensure that those assets pass to the people you want to inherit or manage them when you pass away. 

Why You Should Have Them: Not many people realize that legally, beneficiary designations on their assets may override the terms of a legal last will and testament. Updating or creating a will without updating beneficiary designations (or failing to making a list and including that in your estate plan for clarity and easy access) means that your will may not be carried out in the way you intended. 

Want To Learn More About Estate Planning? Call Daly Law Offices For A Free Consultation!
Estate planning is complicated – what documents you should have depends on your unique financial situation and family dynamics, and drafting those documents takes extensive knowledge of Pennsylvania state laws. At Daly Law Offices, we are equipped and prepared to guide you every step of the way through the process! We can educate you, answer all of your questions, take the time to get to know your goals, and then draft every estate planning document you need without mistakes. Our lead attorney, Joshua N. Daly, has been helping Pennsylvanians with estate planning for over 15 years. His experience and attention to detail can give you peace of mind! He prides himself on offering practical solutions and professional integrity to clients and protecting what matters most to them. Call his firm today to schedule a free consultation and learn more about how he can serve you!

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