Most financial Planners will tell you that there are some (4!) legal documents everyone should have (at minimum). We share them here:
- A Will — If you don’t write a will, then you are allowing a judge of the probate court to decide how your goods will be divided and distributed. A will goes into effect only after you die. A Will can address:
- The distribution of your estate upon your death
- Naming a guardian for minor children
- Creating a trust and naming a trustee to handle the estate on behalf of minor children or grandchildren
- Establishing a Supplemental Needs Trust for your spouse, disabled children, or other loved ones
- Preserving assets while continuing Medicaid or other Long-Term Care benefits for a surviving spouse
A Will with Asset Protection Supplemental Needs Trust is best. Supplemental needs trusts are compliant with provisions of US state and federal law and are designed to provide benefits to, and protect the assets of, individuals with physical, psychiatric, or intellectual disabilities, and still allow such persons to be qualified for and receive governmental health care benefits, especially long-term nursing care benefits, under the Medicaid welfare program. Supplemental or Special Needs Trusts are frequently used to receive an inheritance or personal injury litigation proceeds on behalf of an individual with a disability, in order to allow the person to qualify for Medicaid benefits.
- Living Trust — Just like a will, a living trust spells out exactly what your desires are with regard to your assets, your dependents, and your heirs. The big difference is that a will becomes effective only after you die and your will has been entered into probate. A living trust bypasses the costly and time-consuming process of probate, enabling your appointed successor trustee to carry out your instructions as documented in your living trust at your death, and also if you’re unable to manage your financial, healthcare, and legal affairs due to incapacity. Your successor trustee will pay your debts and distribute your assets according to your instructions. A living trust is most appropriate for individuals who have complex financial or personal circumstances, such as substantial assets, a blended family, closely held business interests, or property in other states.
- Durable Power of Attorney for financial affairs — A Power of Attorney gives a trusted individual the authority to act on your behalf. This legal document names a person as manager of your financial affairs in the event that you become incapacitated. It does not take away your authority as long as you are capable of making decisions.
- Durable Power of Attorney for health care — This Power of Attorney names one person as “your voice” for medical decisions in the event that you become incapacitated. It communicates your wishes regarding medical decisions, care and end of life care. It does not take away your authority as long as you are capable of making decisions regarding your own care.
And you can take your legal docs a step further with a comprehensive Estate Plan which gives you control over your assets, spares your loved ones from unnecessary expenses in handling your estate, and gives you the power to designate the people who will handle your financial affairs and make medical decisions on your behalf in the event that you become incapacitated.
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