No matter your goals and aspirations, one thing that will end it all is death. This uncomfortable truth is one sensitive subject that many people try to avoid. But then again, who can blame them?
Thinking about one’s death often brings about a series of questions, some of which you won’t find answers to. For example, the question of where your assets will go will surely be up there. Also, if you have a family or loved ones, you will question how they fare when you are gone, etc. Although important, some of these questions are very unpleasant and usually awkward. And that’s where we come in.
As a leading law firm in British Columbia, we can help you answer some of these questions – particularly about what will happen to your assets when you are gone. So, how do we do that? We do that by working with you to draft your very own estate planning document. Included in your estate planning are “documents” that specify what happens to your assets when you die, amongst others.
So, without further delay, let us look at four key estate planning documents.
Essential Estate Planning Documents
Before we proceed here, we need to clarify: Estate planning is not only for rich people! Anybody with financial assets can plan their estate to ensure that their finances are well taken care of even after they pass on.
Also, you do not have to wait till you are old before you plan your estate. Remember, death doesn’t give deadlines. It can harvest your soul at any point in time!
Lastly, you may have probably heard the term “will” numerous times, and you are inclined to believe that estate planning is also known as the last will. Well, if you believe this, then you are wrong. Although the term “will” is also part of estate planning, there’s more to an estate plan than simply a “Will”.
Now that we have dealt with some misconceptions let us look at 4 key estate planning documents.
· A Will
Out of all the estate planning documents, the will or the last will is by far the most popular. This is because a Will is what most people are familiar with. As with other documents, the importance and role of Will in general estate planning cannot be overlooked. Typically, a will ensures that your preferred beneficiaries inherit all the financial resources you left behind after you pass on. Without a will in place, this wouldn’t have been possible; instead, what will happen is that your state’s legal system will be the one to decide who gets assets. The downside is that the state legal system may end up giving the assets to people you originally do not want to give.
In a will, you will be allowed to name a guardian. The role of the named guardian would be to raise your children should you pass away unexpectedly. You also get to name an executor for your estate. An executor will see to the distribution of the assets to named beneficiaries. You can name a family member as your executor; you can also name a friend or a lawyer. You can also hire a private executor. Private executors are trained in that particular field.
· Durable Power of Attorney
Another thing many people don’t know is that estate planning is not only done to cater for your death. You also need to plan your estate accordingly should you become incapacitated. For instance, when you are mentally or physically disabled.
A durable power of attorney is another important estate planning document that caters to this life challenge. A durable power of attorney document typically appoints a person to step into your financial shoes either temporarily or permanently should you become incapacitated to do anything. As long as you trust the person, the appointee could be anyone. It could be one of your family members, friends, associates, distant relatives, lawyers, etc.
This person’s role ranges from managing financial assets, paying bills and taxes, making real estate transactions on your behalf, etc. The authority given in a durable power of attorney automatically ends when the person that granted the authority dies.
· Healthcare Power of Attorney (POA)
This document is very similar to Durable Power Of Attorney. The only difference is that durable power of attorney will only cater to your financial matters. Healthcare power of attorney, on the other hand, will deal with your health matters. Just like the durable power of attorney, you will select someone to be your agent (you can name extra should your main pick is unable to serve). This person you have selected will make health decisions for you when you cannot do any of that. However, before you select someone to be your agent, make sure you can trust them. Also, ensure they are very knowledgeable and can make convincing decisions.
· Living Trust
This is yet another essential document that you may have heard of. But if you haven’t, we will try to explain it. Trust, which some people call a revocable living trust, is an estate planning document you create before you pass one to transfer your financial assets Into a trust for your beneficiaries without needing to go through court probate. You may not be familiar with this because this type of estate planning is mostly used by extremely wealthy people – people with complex estates and multiple beneficiaries to go with.
One important feature of a living trust is that you can still control and manage these assets while alive. You can add and remove assets from the trust if need be. However, you stop having control over the trust the moment you die. Instead, the assets are transferred to the beneficiaries.
Conclusion
There are still many estates planning documents aside from the 4 we have explained here. If you intend to start your estate planning journey and you want to get yourself familiar with the other documents, then don’t hesitate to book a session with us today
