Seven Documents For The Good Life… Before Time Runs Out

Good Life. Is it? What that means for you is up to you. I say the answer is in what you do and your point of view. Maybe this written piece could help people live better lives with less worry, and thereby, with more enjoyment. Just maybe.

These seven documents are estate planning or financial plan pieces that should add to a person’s peace of mind and help the reader rest easier knowing there is (or soon could be) a plan in place just in case you are “hit by the bus”.

Will or a Trust

You probably heard people say “I need to get my will done!” even though most people die without a Will. Maybe that’s because most people find it difficult to think about their own death and the writing and signing of a will requires it. Or, it could be that many people figure they have no property or real estate to transfer – even though there may be a serious amount of life insurance money that could pay into the deceased’s estate with an unexpected early passing of a wage-earning parent of young children. I have seen many family arguments erupt from the fact that there was no will to direct how life insurance proceeds would be used for surviving children and a surviving spouse. When someone dies unexpectedly and with personal or life insurance money, problems often erupt if there is no will or trust. Simply, a Will or a Trust prepared by an experienced estate planning or Trusts & Estates (T&E) attorney could easily prevent many future problems.

Financial Power of Attorney (FPOA)

The Financial Power of Attorney document allows another person (agent) to transact anything financial for you during any time of your incapacity. Again, this document is easily prepared for clients by a Trust and Estates attorney and it helps prevent a costly future conservatorship court proceeding to gain control of a person’s financial affairs after incapacity. Point: plan for incapacity while you have the capacity – with the free-reasonable FPOA – so that later when you are incapacitated it does not cost a fortune (to acquire a judge-ordered conservatorship) for someone else to help you pay your bills.

Advanced Directives for Health Care (ADHC)

Advanced Directives for Health Care (ADHC) document allows another person (agent) to handle anything related to your medical care, including small tasks like making doctors’ appointments or big decisions like when to discontinue life support. This ADHC document is handily established in a person’s estate planning documents, along with extremely helpful advice if prepared by a knowledgeable Trusts and Estates attorney. If you have these medical documents already established in a different state from your current home state, beware, these possibly may not be accepted by medical institutions in your home state. In Georgia, this ADHC document replaced the Living Will in 2007; in other states, it may be called a healthcare proxy or healthcare power of attorney.

Corporate Charter or LLC Formation Documents

The Corporate Charter is the most overlooked and yet most flexible, versatile planning instrument that may be set in place for many purposes. This is often the starting point and the set of documents first acquired when a person starts accumulating income, cash, wealth, and eventually legacy through their own hard work, sweat equity, and entrepreneurial skills. Most business owners have a corporate entity or have part ownership in a joint venture under some corporate entity like an LLC or incorporation. The many purposes of a corporate charter include:

  • To make a business entity separate from the person or to “legitimize” a business from a sole proprietorship to a corporate entity.
  • Joint ownership of real estate property among multiple family members.
  • Tax deductions for business activities, rentals, leases, expenses, etc.
  • Personal protection, known as “limitation of liability” from business transactions gone bad.

Life Insurance

This is a very useful document to have. A cash death benefit is paid, under a life insurance policy, to a named beneficiary when the insured person passes away. Life insurance is sold by any reputable licensed agent that sells insurance products. Having life insurance could bring peace of mind to the insured, knowing there is death benefit money to be paid, usually to surviving a surviving spouse and/or children of the decedent, just in case of early or unexpected death. When term life insurance pays out, which happens near 1% of the time, usually minor children and surviving spouses are the survivors that need the life insurance payout to replace the income and support that the decedent would have earned if he or she survived. It can get extremely complicated if life insurance proceeds are set to be paid out to a minor child beneficiary because a court-ordered trust must be constructed. It can get worse if benefits paid out to an ex-spouse because of an overlooked post-divorce beneficiary change.

The life insurance that a person has is an important piece of that person’s estate plan that must be carefully reviewed by an estate planner when assisting with a client’s estate plan. I do maintain that an estate planner who offers life insurance is ethically challenged – but they are required by the state bar to reveal that the inherent conflict of interest and seek the clients’ written waiver of conflict (Caveat emptor!). Most importantly, the estate planner should carefully review and coordinate how life insurance will pay out to minor or restricted beneficiaries through directives found inside the will or trust.

Written Review of Estate Plan

Many people already have their will or trust estate plan documents established years or decades ago. Often it happens that conditions change over the years and a person’s original estate plan needs to be revised as new family members come and go, assets are accumulated, living conditions change, and assistance is needed with late-in-life transitions. A written review of your estate plan by an expert is much better than a “verbal review” because the reviewer would be giving you written, legal advice behind which they should stand by name and reputation. After all, would you let your auto-mechanic sell you life insurance or vice versa? Then why would you let anyone other than an expert in estate planning provide you advice or documents that would permanently set or affect your estate plan and legacy? The estate planner ties together all the above documents and often helps coordinates business, insurance, and special family concerns into a cohesive, organized, and personal estate plan.

So long as you trust an advisor to help and you find or have a known reputable advisor that does, use that person’s advice and enjoy the peace of mind you receive from knowing there is a plan in place, just in case.

The documents listed above are the most common planning documents used in the creation of a person’s complete estate plan. I understand that it is difficult enough to deal personally with the drafting of the documents but there is also the chance that you could overpay and receive estate plan documents that won’t work as intended. But how would you ever know the plan will work correctly until the person who signed the will or trust dies?

One clue is that if the preparer also wants to sell you life insurance, then the fees (not your goals) are driving the plan and the fee will be high. Another clue is if the plan preparer is in general law practice and they also “do wills”, then their practice might focus on your Will or Trust as another line of income moreover than delivering a planning solution that resolves your legacy and peacefully passes it to surviving family. You know the plan will work simply by using a specialist who focuses the practice on estate planning and probate and by comparing among similar specialists, using all information including online reviews about the quality of work and the reputation of the estate planning practitioner.

With one chance to make a great legacy from your estate plan, do it right. Or, forever rest in peace and let the chips fall where they may.

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