Six out of 10 adults in the United States do not have a will. In fact, studies show that 78% of millennials (ages 24 to 39) and 64% of Generation Xers (40 to 55) do not have wills. Many people don’t have wills because they feel they don’t have enough assets. Proper estate planning, however, can protect children, other family members and pets. It can also protect the assets you leave behind from creditors. For these and other reasons, everyone should have at least the following five basic estate planning documents:
A will allows you to determine who gets your assets when you pass. Without a will, assets held in your name will go to whomever state statute says. With a will, you can leave your assets to your children, other loved ones, your pet or a favorite charity. You can also direct when and how your beneficiaries receive those assets. For example, you may want to structure asset distributions to a child.
Perhaps of greatest importance, if you have young children, you can appoint a guardian for those children if something were to happen to you.
2. Durable General Power of Attorney
A durable general power of attorney allows another person to manage your financial affairs if you are unable to do so. The person given the power becomes your attorney-in-fact and is a fiduciary charged with protecting your interests.
3. Designation of a Health Care Agent
Designating a healthcare agent, allows another person to act on your behalf to make medical decisions where you are unable to do so. You can and should provide explicit direction to your health care agent in the health care agent designation or in an advance healthcare directive.
4. Advance Healthcare Directive
An advance healthcare directive or living will allows you to express what medical measures you do or do not want taken to prolong your life. Do you want doctors to do everything possible to extend your life? Are there certain measures that you do not want taken to prolong your life? If you have designated a health care agent, the agent must follow the advance health care directive.
5. Appointment of Conservator
You should also consider appointing a conservator. There are two types of conservatorships; conservatorship of the person and conservatorship of the finances of the person. A conservator is appointed by the probate court and is subject to its oversight. For example, a conservator of the finances is required to account for all financial transactions.
These five documents can provide the foundation for your estate planning. Of course, there may be situations which present greater complexities and require other types of planning.