Estate Planning: Five Documents to Create (or update) in 2016

There are five estate planning documents that every adult should have in place, and it is best practice to review and update these documents at least every five years. Make 2016 the year to craft or review these important papers.

  • Power of Attorney for Medical Matters
  • Power of Attorney for Financial Matters
  • Living Will
  • Will
  • Beneficiary Designations

If you are unconscious or cognitively impaired and a decision needs to be made about medical treatment, who decides? A Power of Attorney for Medical Matters appoints an agent to make medical decisions for you when you can’t do so yourself.

Include the person’s physical address, e-mail, and phone numbers for your Power of Attorney for Medical Matters so that medical providers can find them. It’s a good idea to name a back-up person too, in case the first named person cannot or will not serve.

Power of Attorney for Financial Matters
This is the most important thing for every person to have. A power of attorney names someone to handle your finances for you. If you are hurt or disabled, temporarily or permanently, you need to make sure that you have designated an agent to take care of your financial affairs. No matter your age you could have an accident or a periods of unavailability or incapacity.

Your spouse does not have the authority to act for you. Just being married does not give your spouse control over your finances.

Things a power of attorney can do include: paying bills, making Insurance claims, DUI rights, managing investments, filing tax returns. Make sure that you name a back-up agent in case the first named person cannot or will not serve.

If you can’t take care of your finances yourself and you haven’t designated someone as an agent under a power of attorney, the only alternative is a court-appointed guardian. That’s a very expensive, inconvenient and burdensome alternative.

Advance Health Care Directive or Living Will
A “Living Will” is the opposite of what it sounds like. In a Living Will you can state your wishes you’re your end of life care. Whether you want to be on life support, continue dialysis, donate your organs and other directives can be included in this document. The “living will” will only go into effect if you are terminally ill and unable to communicate your preferences. This is a vital document to eliminate doubt and guilt for your loved ones.

Making a will allows you to appoint an executor (who will be in charge of settling your estate), appoint a guardian for minor children and designate who receives your property including individuals and organizations with whom you’d like to support.  Financial assets can be distributed as percentages or fixed amounts.

Everyone should have a will. If you die without a will, your state intestacy statute will spell out who gets your property. The estate will go into probate- a long and needless delay. The usual distribution is a portion for a surviving spouse with the balance to children or parents.

Beneficiary Designations
Some types of assets cannot be designated in your will.  A beneficiary for retirement plans, IRAs, life insurance and annuities are allocated to your chosen beneficiaries (people or organizations). They do not pass according to the will. Passing these types of assets to individuals can mean a heavy tax burden, and therefore it may make sense to have an estate plan to satisfy your charitable goals.

To learn more about estate planning or the benefits of joining the LightHouse Legacy Society, contact 415-694-7333 or