Every estate plan should consist of multiple documents which supplement one another. Exactly how many documents and what types you will need for your estate, however, can vary greatly depending upon your situation. For example, many forms of trust and power of attorney documents exist, some of which may typically be used by business owners, people who own out-of-state property, or individuals in other special situations.
But before you and your attorney get deep into the details of your estate, your move when starting out should be to complete the estate documents that everyone needs. Beyond just creating a will, there are steps you can take right away for the sake of your loved ones, future healthcare, financial accounts, and business affairs. If you’re beginning or editing an estate plan in New Jersey, the experienced legal team at SGW Law can make this process straightforward and fast, so that you can have your family’s future secured as soon as possible.
Get in touch with our attorneys today, or read below for more information on the most critically important documentation for estate planning.
Last Will and Testament
A will is the single most basic part of any estate plan. Every adult is meant to have one, whether they have the simplest or most complex financial situation. After you are deceased, as long as you have a will, your assets can be distributed according to your instructions, and if you have minor children, they will be given into the care of the guardians you named for them. Wills are limited in what they can accomplish, so they are not sufficient for a complete estate plan – but they absolutely are necessary. A person who dies intestate – without a will – has no personal control over what happens to their property, as the state government distributes it according to relevant laws.
Revocable Living Trust
Property in a will is subject to a process called probate, in which the legitimacy of the will and the transfer must be proven in court. This is a public and time-consuming process, and for specific assets, you may wish to give them to your heirs more efficiently and privately through a revocable living trust.
When a person sets up this type of trust, they are typically the trustee for as long as they are living and capable. In other words, they continue to manage any property placed in trust. Upon their death or incapacitation, a successor trustee – one of their heirs – can immediately assume control, thus avoiding probate. If you own real estate that is very valuable or that is in multiple locations, a revocable living trust may be the best choice. Keep in mind, however, that this type of trust usually does not change the tax liability associated with estate property.
Durable Power of Attorney
If you have financial affairs requiring active management, such as running a company, creating a durable power of attorney will ensure that no matter what happens to you, your finances will be in reliable hands. This type of document appoints a person of your choice to take over your business and legal decisions in the event of your medical incapacitation or decease. Someone who is the head of a family manufacturing business, for example, can name a successor in this way, meaning payroll will be made, contracts will be signed, clients will receive shipments, and raw material will be purchased no matter what.
Healthcare Proxy/Medical Power of Attorney
Not all estate plan documents go into effect upon the creator’s death. Healthcare proxies and medical powers of attorney can help your loved ones manage your care during your lifetime if you are no longer able to. A document of this type grants one of your loved ones the legal power to make decisions specifically related to your medical care. While the terms for the documentation and the person you designate may differ by jurisdiction, taking this step has the same effect of preventing health-related uncertainty for you and your family and assuring that someone will advocate for you medically when you need it.
Living Will
Related to but distinct from a healthcare proxy/medical power of attorney, you should also complete a living will to cover all possible health-related situations if you are alive but incapacitated. A living will – also known as an advance healthcare directive – does not name a specific person to make your medical decisions, but instead provides binding instructions on what treatment-related actions to take. For many people, this includes whether or not to keep them on life support if they have a terminal condition. It may also cover instructions for pain management and palliative or hospice care. As long as you have a living will, the person named as your healthcare proxy/medical power of attorney will have a detailed account of your wishes regarding your health.
HIPAA Authorization
HIPAA, the Health Insurance Portability and Accountability Act, is one of the landmark laws in American healthcare regulation as well as in privacy protection. Under this law, there are strict rules about access to personal medical information by anyone other than a patient and their healthcare providers. A HIPAA authorization lets you name individuals who can view this information in your stead if you are no longer able to manage your own medical care. Without proper authorization, even your spouse or children may not be allowed to know your medical data, so this relatively simple form is just as important as other healthcare-related estate documents.
Beneficiary Designation
Many different types of common financial instruments use a simple designation to identify a beneficiary in the event of the account holder’s death. Life insurance, retirement accounts, mutual funds, and certain bank accounts, among others, all work in this way. It’s usually relatively easy to assign or change a beneficiary, but don’t overlook this step even as you carry through the more complicated aspects of estate planning. This is because a beneficiary designation takes precedence over instructions in a will. Even if you’ve changed your will more recently, whomever is named as the beneficiary for that account will receive those assets when you are deceased.
Letter of Intent
All of the other documents discussed above are legally binding. A letter of intent is not – a court cannot enforce it. However, writing a sealed letter to be opened along with your will can be a very useful tool. For example, it can communicate your desires for your funeral or memorial services, and give your executor additional information or details they may need to locate and hand over assets.
Contact Our Estate Planning Attorneys
While all of these document types are helpful and applicable to anyone making an estate plan, there are countless other ones that may be needed for individual situations. To make the right estate planning moves for you, reach out to the team at SGW Law.
Our NJ estate and tax attorneys have the skill to guide you through the process and the compassion to help you make the best decisions for yourself and your family. For more information, contact the most trusted estate law team in the Garden State.