In one of my recent community education classes, I was asked to rank my favorite estate documents. Thus, here we go…
Really though, I think the issue was more about money than actual estate documents.
In other words, if I had a limited budget and I needed to use my resources wisely, which documents would I desperately need? Minus my first reaction – all of them, here are my thoughts:
Estate Documents Ranked #5 – Revocable Trust
Because a trust document is a lengthy and tedious process, I am ranking trust documents number five verses number one. But, their effectiveness is off the charts.
A long long time ago, people started using wills to make sure their stuff was passed along easily and effectively. Those days are gone. Today, one of the most effective tools is a revocable trust. Your grandparent’s estate planning methods are out of date. If you are a grandparent, making an update can make holiday gatherings fun again.
My point is this: because a trust helps families reduce the risk of probate and it grants a trustee an opportunity to manage our affairs while we are still alive, I believe a trust is absolutely one of the best documents in any plan.
#4 – Transfer on Death Deed
My fourth estate documents ranked are transfer on death deeds or TODD. In practice, this document is awesome because it instantly transfers property titles to another person or beneficiary. Sometimes, eve more than one beneficiary.
On the other hand, drafting a legal description and using the right conveyance form makes this process difficult for families needing help.
Nonetheless, because this type of document trumps a will and our number one asset is often a home, I ranked transfer on death deeds higher than a traditional will.
#3 – Health Care Directive
When I am sick or unable to talk for myself, I like the idea of making sure my loved can make health decisions on my behalf. Luckily, a health care directive or living will can do just that.
I am in favor of making sure my affairs are straight when I am dead, so the burden imposed on my family is less. But, I like the idea of focusing on my own well being while I am alive. This is especially true when I introduced to an unexpected emergency.
Thus, I like the idea of ranking living wills as my third favorite estate planning document.
#2 – Power of Attorney
A lot of people are surprised when their spouse cannot make certain transactions on behalf of their partner, without being granted a power of attorney. Luckily, this risk can be accounted for by using a free form linked below.
Yes, one of the most powerful documents we can put our signature on is a Power of Attorney form. Some people are scared of this. Others, use it to their advantage. Obviously, every person is different and they should seek advisement exclusive to their situation. That said, it is worth the effort of reviewing what this type of document might look like.
Since Minnesota introduced a free power of attorney form, I encourage many folks to select their attorney-in-fact wisely, while ensuring certain household events are easily cared for: house payment, buying groceries, assessing my checking account, etc.
Even more significant, a power of attorney can be used if or when I am incapacitated, which puts me at ease.
#1 – Beneficiary Forms
My number one estate documents ranked are beneficiary forms attached to financial accounts (IRA, 401K, 403b, etc.). Usually, these types of documents are readily available, are easy to fill out and offer instant relief.
In many circumstances, a beneficiary form will trump directions outlined in a will or trust. Because they are so effective, anybody failing to update their beneficiary form is creating a huge mess or forcing their family to seek relief in probate court.
In addition, I like the idea of gathering copies of my beneficiary forms and having them available. In other words, I keep copies of beneficiary forms with my other important documents. In theory, this will help my loved ones with an easier transition upon my demise.
Estate Documents Ranked – Honorable Mentions
Of course, there are many other resources that families and veterans should consider when creating an estate plan. Thus, here are a few resources and documents that folks are using: