Essential Legal Documents Needed to Create an Effective Estate Plan

Life is full of uncertainties and inevitabilities. Anyone can suffer an injury or sudden catastrophic illness that makes them rely on others to go about their daily activities or renders them legally incapable of making important life decisions for themselves. And of course, death is a reality of life that nobody can escape from. 

With that in mind, you should set up an estate plan regardless of your age, financial status or family situation. Estate planning involves using a variety of legal tools to ensure your health and wealth are looked after in the event of your incapacity or death. It helps to avoid probate and reduce taxes as well as protect your family and assets. 

Check out some essential legal documents required to set up an effective estate plan.

A Valid Will

Your will is one of the most important legal tools that is needed to plan your estate. It reveals how you want your assets and property to be distributed when you die. The people that stand to benefit from your will are called beneficiaries. The beneficiaries of your will are typically your family members but can also include charities and other people who are close to your heart. 

If you die without having a valid will in place, then you will be considered to have died intestate. Your estate and property will have to go through probate in order to determine who is entitled to a share of the wealth. The probate process can be lengthy, stressful and messy and thus should be avoided whenever possible.

A Medical Directive

If your health deteriorates to the extent that you're unable to make decisions regarding your health yourself, you can prepare a medical directive to nominate the person that you'd like to make the decisions on your behalf.

These decisions include aspects of your personal health such as where you would stay, what types of treatment and quality of care you would receive and so on.

A Living Trust

When you create a living trust, you're essentially transferring your assets and property to a separate legal entity known as a trust. While you're still alive, you will act as both a trustee (manager of the trust) and beneficiary of the trust. But in the event that you lose the legal capacity to manage the trust, the elected successor trustee will come in to make all the important financial decisions on your behalf.

Because you set up the trust, your successor trustee will be bound to manage the trust according to your specific instructions.

Depending on where you live and where your properties are located, the type and number of legal documents required to establish an estate plan may vary from state to state. Talk to your state-specific estate planning lawyer if you need help with preparing the documents you will need to create an estate plan that's right for you and your family.

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