Video: Estate Planning 101: 5 Important Documents You Need & Why

Man signing legal documents
Most individuals have the vague idea that estate planning is about passing on one’s assets to loved ones when we die. This is true, but it is quite a bit more involved than that. Estate planning is a series of legal documents that clearly spell out your wishes when you pass away or cannot make decisions for yourself.
In this video, Senior Wealth Advisor, Blaine Carr explores the 5 important estate planning documents most people need. 

Estate Planning 101: 5 Important Documents You Need & Why

Video Transcript:

Do you have a legal Will?  If so, when was it prepared?  When did you last look at it?

Hello, this is Blaine Carr with Petersen Hastings. Today I will talk about estate planning.  Unfortunately, far too many people have no plan.  Most studies show that more than half of all adults in the U.S. do not have a Will.

Every adult needs an estate plan. Without a formal estate plan the laws in your state of residence will determine who will be appointed to manage your affairs during your lifetime, if you become incapacitated, and who will receive your property upon your death.  If you have concerns that a court may appoint someone you don’t want or may distribute your assets in a way that is inconsistent with your wishes, then you need an estate plan. If you are concerned that your family members or loved ones may have difficulties managing financial assets or are not yet financially responsible, you may want to create an estate plan to provide for the professional oversight and management of your assets after your death.  Finally, having a well written and up-to-date estate plan can streamline the administration of your affairs and avoid delays, expenses, and family conflict.

Next, I would like to cover some of the basic documents you will need.

1. Last Will & Testament

A Last Will and Testament is a document which allows you to control the disposition of your assets at death. A Will also allows you to name guardians for minor children. If you do not name guardians in your Will, the court will decide who the guardians of your minor children will be, which may not be in accordance with your wishes. You can also create a Testamentary Trust in your will to provide asset protection for your beneficiaries.

2. Power of Attorney for Property

A Power of Attorney for Property is a document that allows you to name an agent who has the legal authority to make financial decisions on your behalf and access your financial assets for your benefit if you are unable to do so. If you do not have a Power of Attorney for Property, a court must appoint a conservator or guardian to manage your affairs if you become incapacitated.

3. Power of Attorney for Health Care

A Power of Attorney for Health Care is similar, except your agent will make health care decisions on your behalf if you are unable to do so. 

4. Health Care Directive

In addition, you may want to consider executing a Health Care Directive. This document allows you to give clear directions regarding your end-of-life decisions, so your family can be relieved of this burden.

With both a Power of Attorney for Property and Power of Attorney for Health Care, it is important to determine if the agents you name are willing and able to handle these potential responsibilities. Keep in mind that the person you name to handle your financial affairs and the person you name to make health care decisions do not have to be the same. It’s also important to remember that asking someone to be your agent doesn’t mean they will be willing and able to act. For this reason, it is best to name multiple agents.

5. Beneficiary Designations

Your estate plan also includes Beneficiary Designations.  These are commonly used on life insurance policies, annuity contracts, retirement accounts, and even bank or brokerage accounts.  It is important to remember that your Beneficiary Designations for these types of assets supersede the beneficiaries you list in your will or living trust.  For this reason, it is critical to coordinate Beneficiary Designations with the rest of your estate plan.

If your estate plan is not properly planned and implemented, your assets may be distributed in a manner that is not aligned with your wishes, or that creates adverse income tax or estate tax consequences for your beneficiaries.  The main documents you need are a Will, Powers of Attorney for Property and Health Care, Health Care Directives, and Beneficiary Designations.  It is also important to review your estate plan periodically (every three to five years), or if you experience a significant life event like a divorce, death of a spouse or child, or relocate to a different state.  Then you make can make appropriate updates as needed.

Thank you for tuning in.  You should check with a licensed estate planning attorney before you implement any of the strategies covered in this video.  Please share this video with your friends and family.  I encourage you to reach out to us at Petersen Hastings if you would like more information on estate planning.  Join me next time and I’ll cover some more advanced estate planning topics.