While it is true that estate planning has become a topic of interest as of late, many people get bogged down in the details or think it is just too much work. However, in practice, most people actually only need three or four documents for an effective estate plan.
First, a will
The first and most basic document is a will. This, essentially, outlines who gets what, who will be responsible for ensuring it and what the drafter wants done to their body after they pass (i.e., funeral, burial, cremation, etc.). Everyone, 18-years-old and older, should have a will, especially, if one has kids because this document can also name a guardian for minor children. Though, keep in mind, since this does not kick in until one dies, it is not enough.
Second, a health care power of attorney
What happens if one become disabled, incapacitated or unable to make their own decisions for whatever reason? Who would decide whether to keep them on life support, approve a blood transfusion, etc.? A health care power of attorney is the document that would activate in these scenarios, and would empower someone to make healthcare decisions.
Third, a financial or property power of attorney
A financial or property power of attorney empowers another to make financial decisions for the drafter, if they are unable to do so themselves. It is in place to make sure that bills get paid, businesses keep running or, maybe, even to cancel bills. For example, if a college student is incapacitated and expected to be hospitalized, someone will need to unenroll them, cancel bills (i.e., Netflix, tuition, etc.) and wrap up their affairs while they are in the hospital. This is why both of these documents are needed in every estate plan, even if one just turned 18.
Fourth, a living trust agreement
A living trust agreement is not always a needed estate planning document, but for those with families or any amount of assets, it can be a good idea to craft one. A trust allows one to name a trustee that can handle their financial affairs that relate to the trust, if they become incapacitated. And, in some cases, it can help avoid some taxes and maintain privacy. Plus, it can avoid the need for probate for Golden, Colorado, residents.