Legal Documents Everyone Should Have
Everyone knows that they should have a will, especially by the time you reach your “Golden Years,” but what other important legal documents should you have? See below for four essential legal documents everyone should have, plus information on how to get them.
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. He may appoint someone you don’t trust to distribute your property after your death. Estate law is complicated and is different in each state. Writing a will is the best assurance that your desires regarding your property will be respected. If you don’t want to go to an attorney to have your will drawn up, there are online resources such as Nolo or inexpensive software from an office supply store to help you with the process.
2. Living Trust
But the will is only the beginning of the paperwork you should have ready for end of life planning. People with substantial assets often choose to have a living trust set up. This allows you to bypass the expensive and prolonged process of probate and protects your privacy. A will only takes effect after you die and the will is probated and managed by the executor. The living trust can take effect immediately upon your death without probate, or can take effect if you are incapacitated and unable to manage your financial and legal affairs. The successor trustee manages the living trust instead of an executor, but the roles are basically the same. A living trust is most appropriate for people who have complicated financial or personal circumstances, such as owning a business or owning property in more than one state, or having a blended family. The fees for setting up a living trust are generally $1000-$3000 per person. If you make a living trust, you still need a will.
3. Durable Power of Attorney
Not everyone needs a living trust but everyone should have advance medical directives including a durable power of attorney. A durable power of attorney goes into effect if you become incapacitated for some reason, whether from an accidental injury, loss of mental capacity or some other reason. A regular power of attorney becomes invalid if the grantor becomes mentally incapacitated, so a durable power of attorney is needed.
You should carefully choose a trusted friend or family member to be named as agent in the durable power of attorney. You are the “principal” in the document. The agent could be your spouse, but you may want to name a backup, as your spouse may be in the same condition you are. Generally a person who is younger is a good choice. This person would take care of paying your bills, and managing your health care and your money if you cannot do it. If you have no durable power of attorney and you become incapacitated, your relatives would have to go to court to get the authority to take care of your finances and health care. This is a simple, one-page document and should be made well in advance of possibly needing it. If a person has advanced Alzheimer’s disease, he may not be able to execute a durable power of attorney because he would not be of sound mind. A template for this document is available online from Tidy Form or Rocket Lawyer.
4. Advance Medical Directive
An advance medical directive or advance healthcare directive allows you to name a health care agent (or proxy, representative, surrogate, advocate, or attorney-in-fact, depending on your state) and describe the medical treatments you want (or don’t want) to receive. Usually your health care agent is the same person who is your agent in your durable power of attorney.
In addition to naming a proxy, you should think about what kind of medical treatment you are willing to undergo. With advances in medicine, doctors can keep people technically alive for a long time. But this does not consider your quality of life. Some people do not want to be kept alive with machines and tubes hanging all over them. Some prefer not to be kept alive if they are in a coma. Others want to be kept alive at all costs. Whatever your wishes, the advance medical directive is the place to state them. You can download a form appropriate to your state here.