The underlying goal of proper estate planning is to ensure the legacy you leave behind provides your family with essential information to help guide them through a difficult and confusing time. There are a number of fundamental components to consider when working with a financial advisor and estate attorney to draft your estate planning documents. Below you will find an outline of each item.
Last Will and Testament
A Last Will and Testament (“Will”) is a legal document naming guardians for your minor children and directing the distribution of your assets upon your death. While a Will can be contested and does go through the probate process, it is the bare minimum legal protection you need. Without one, the court may appoint guardians for your children who may or may not provide for them as you desired.
Personal Property Memorandum
When writing your Will, one of the most important tasks is to identify who should inherit your personal property. Do you want to leave everything to your spouse, for example, or do you have lots of items you’d like to leave to different relatives and friends? One solution is to draft a separate document, called a “Personal Property Memorandum,” which is simply a signed list of items and the people you wish to inherit them.
Durable General Power of Attorney
This legal document gives someone you choose the right to make financial decisions on your behalf if you are unable to do so. You name this person as your agent (he or she does not need to be an attorney) who steps into your shoes, legally speaking. If you should become incapacitated, your agent can maintain your financial affairs until you are again able to do so, without any need for court involvement.
Without a durable general power of attorney, your closest blood relative—who may not be your choice or know your wishes—will generally be given this authority.
This document is your declaration that you do not desire to receive life-sustaining treatment if there is no significant hope of recovery. In its Nancy Cruzan decision, the U.S. Supreme Court ruled that to be taken off life support (including intravenous nourishment and fluids), you must have declared your desire before becoming incapacitated. Even if you are young and in good health, you may want to consider having a living will in place. The failure to have one upon incapacity can create tremendous emotional and financial costs to your family.
Healthcare Proxy/Durable Medical Power of Attorney
While a living will is your legal declaration not to use life-sustaining measures, a healthcare proxy is designed to grant someone you choose the legal power to make medical decisions for you, if you are unable to do so on your own. As with a durable general power of attorney, if you don’t have a healthcare proxy, your closest blood relative will generally be called on to make decisions for you.
These documents, combined with a holistic financial plan, will help build the foundation of your loving legacy. iBi
Cathy S. Butler, CFP, CRPC is a financial advisor with the Butler/Luthy Group of Morgan Stanley. For more information, visit www.morganstanleyfa.com/thebutlerluthygroup.