Make a Family Estate Plan your New Year’s Resolution: Understanding 5 Essential Documents
posted by: Mile High Mamas
New Year’s Resolutions are notoriously hard to keep but this one doesn’t have to go the way of the latest fad diet come February. Creating an estate plan for your family is easier and more important than you might think!
Many families mistakenly assume they are too young to worry about an estate plan, but these documents empower you to make decisions like who will raise your children if you die and how your assets can effectively provide for them. Without a doubt, it is hard to think about such scenarios, but worse is thinking about what could happen if you don’t. Family arguments, court involvement, or significant extra expense are just a few of the potential problems that could occur. Understanding these 5 necessary documents will help you realize that this task doesn’t have to be so overwhelming and is a New Year’s Resolution worth keeping!
- Guardianship Document: The first thing that comes to mind for most parents is the question of who will raise your children if you aren’t able to. Name the person or people you want to serve as guardian(s) in a separate guardianship document or designate this in a Last Will and Testament. If no guardian is nominated, you leave it to the court and family to decide which can lead to contentious fighting or a court decision. In considering a guardian, you may think about people who share your values, religious beliefs, and geographical location, among many other things.
- Last Will and Testament or Revocable Living Trust: Both of these documents will provide instruction for what happens to your assets after you die. For a family who is leaving their assets to children, a testamentary trust or a subtrust is important to have because minor children cannot directly inherit money. This allows you to appoint someone you trust to manage the money on behalf of your children while still allowing them access to the assets. Whether a Will or a Trust is better for you can be discussed in more detail with your attorney.
- Durable Power of Attorney: This document authorizes an individual to act on your behalf for various financial or legal matters if you are unable to act for yourself. This is important in Colorado where your spouse or family is not automatically authorized to do so.
- Medical Power of Attorney: This document authorizes an individual to make medical decisions for you if you are unable to make medical decisions for yourself. Communicating your wishes with your agent is critical so your agent knows what you would want in difficult scenarios.
- Living Will: This document is also referred to as an Advance Directive; it communicates your choices for end-of-life treatment.
Creating an estate plan for your family can secure their future in a lasting and invaluable way and give you peace of mind as you head into 2021! It is a good idea to consult with an estate planning attorney when drafting legal documents of this nature.
In partnership with Mile High Mamas.