Which Estate Planning Documents Should You Create or Update in 2016?

April 1st, 2016

Just like the rest of the world around us, the law needs to evolve and adapt to the changes 2016 has brought and will continue to bring. Legal requirements and guidelines keep changing from time to time for the greater good of everyone, and this applies to every field, whether it is estate planning documents or something else.

You may require documentation to either be created from scratch to follow a new format or ensure that certain edits are made so all your financial and legal paperwork coincides with the latest updates. Those that pertain to estate planning, like your will, are perhaps the most important, so review these at the earliest.

What are Estate Planning Documents?

Estate planning documents are the legal papers that decide the future of your estate, i.e. all the assets and property you own, after your demise. There are five main documents that are especially crucial to update or create if you haven’t already, and with 2016 just starting, now is the right time to do it.

1. Power of Attorney for Financial Matters

This refers to rights that are given to a trusted person to handle your finances in case you become physically or mentally unable to deal with them on your own. This could also be because a person has grown really old and is no longer able to handle the matters anymore. The period of such disability could be temporary or permanent.

In these situations, an appointed representative will take over and act on your behalf. Remember, your spouse does not automatically legally become one and cannot take any action, and in case you fail to appoint a power of attorney, the court assigns one. This can be a cumbersome process that costs a lot, so get this document in place right away.

2. Power of Attorney for Medical Matters

In this case, power of attorney is given to an individual who will decide the course of action if, for instance, you are unconscious or for some other reason unable to take decisions about your medical treatment on your own. It is ideal to appoint someone you trust with medical power of attorney rights and plan for a backup in their place too.

3. Living Will

This document contains the wishes and direction you might want to give in case you become terminally ill or go on life support. In such a case, there are a lot of people who might want to try to get you medical treatment that you would have opposed if you were able to decide for yourself.

A living will clearly states whether you want to stay hooked to a ventilator, for how long you would want to live on life support, should your dialyses go on, and other issues. This document is a huge favor that you will do for your family and make it easy for them to ensure your wishes are respected.

4. Will

Creating a will is important if you want to ensure that your assets, no matter whether they are substantial or meager, go to the rightful owners according to your decision. This could include matters such as the guardianship of your children (if minor) and the estate executer who will handle property distribution.

If you don’t have an updated will that clearly defines the estate distribution, the intestacy statute of your state will apply, giving out property to your spouse, children, parents, siblings and so forth, irrespective of your wishes.

5. Beneficiary Designation

All kinds of insurance plans require a beneficiary, who if designated, overrides the will. This means that if the will states a certain asset goes to A but the policy states the beneficiary to be B, the proceeds will go to B.

Moreover, many people carry retirement income plans such as the 401k, IRAs, annuities, etc. that make most of their net worth. It’s imperative that you name a beneficiary for such assets. In addition, you can even add contingent beneficiary, i.e. the person next in line to benefit from these plans.

The financial experts at Blossom Wealth Management can help you with everything you need, especially with respect to estate planning and financial documentation, so get in touch with our team of advisors today!