Going Beyond a Will: Other Estate-Planning Documents You Need
Even with all your assets properly titled, your beneficiary designations in order, and a will or revocable living trust in place, you still have a few very important issues to take care of and documents to execute. For most people, the odds of becoming incapacitated are much higher than those of dying prematurely. You need some ancillary documents that address incapacity with regard to financial and medical decisions:
Financial power of attorney: A financial power of attorney is a legal document that you need to complete your estate planning. This document generally should be drafted for you by a licensed attorney who specializes in estate planning. However, software is available, and you can find online providers of these documents as well. If you don’t use a qualified estate planning attorney, try Nolo.
This document enables you to appoint someone to make financial decisions and manage your financial affairs in the event that you can’t make these decisions for yourself. It’s best to select one individual as your financial power of attorney, and select at least one successor, should your initial selection be unwilling or unable to perform these services.
Living will: A living will spells out under what circumstances, if any, you want your life prolonged if you have no reasonable chance for recovery. This document is also available through estate-planning attorneys, from the Nolo web site, and from your local hospital. Keep in mind that the forms available through the hospital are going to be very generic and likely not address some specific details that you may feel strongly about. At least with the forms from Nolo, you can tailor the document to your circumstances as best as you know how.
Durable power of attorney for healthcare: This document enables you to name a person, or possibly a couple of people, to make healthcare decisions if you’re unable to make them for yourself. It is also part of a comprehensive estate-planning package provided by any qualified estate-planning attorney. You can obtain this document from Nolo or use the Five Wishes Brochure.
Funeral instructions: Write a letter spelling out your desires regarding your funeral arrangements. Rather than having your grieving loved ones wonder what you would have wanted, give them the gift of knowing your wishes in advance. Also be sure to tell them whether you have any prearranged or prepaid funeral plans and, if so, with whom. It’ll help them out and likely save your estate a lot of money.
Unfortunately, funeral directors and their sales staff have been known to be very skillful in taking advantage of grieving people for their own financial gain. For example, if you don’t specifically tell your family that you want them to keep your funeral service and burial services very modest, your heirs may follow the guidance of a skillful salesperson and spend thousands of dollars on stuff you never would have wanted.