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Let’s be frank—no one likes to think about death and end-of-life arrangements. However, being prepared for the inevitable is not only a smart thing, it’s a kindness for loved ones. A recent article, “12 Documents to Prepare Now for Your Heirs,” from U.S. News & World Report, explains which estate planning documents and other information you must gather and execute now and how much harder it will be for loved ones if you don’t take these steps.
Failing to put your estate in order means family or friends will have to rely on probate court to determine the distribution of your property. Depending on your jurisdiction, this could create lengthy delays, additional court costs and unwanted outcomes. Heirs may also miss out on life insurance proceeds, or accounts may be overlooked if no one knows they exist. Review the list below to start the process of gathering documents so that you can meet with a Lansing estate law firm that can help you design a comprehensive estate plan that includes this collection of documents and guidance for heirs upon death.
A will is the foundation of your estate plan and is used to name an executor to manage your estate, outline your wishes for property distribution and name a guardian for any minor children. You can also use it to make arrangements for pets upon your death. Pets are viewed and treated legally the same as property. However, a pet trust is enforceable and may be a better solution.
A “funded” trust bypasses probate and gives more control over how assets are distributed. For instance, a trust can stipulate minor children do not receive access to their funds until a specific age or milestone is reached. Even with a trust, parents of minor children still need a will to name a guardian.
The POA is for use while you are living. If you become incapacitated because of an illness or accident, the POA lets a designated person act on your behalf while making financial, health, and legal decisions. A Health Care POA allows a designated person or representative to make medical decisions, while a Financial POA, or Durable Power of Attorney, allows a representative to make financial decisions on your behalf. Everyone should have these documents. Read more in our article, Why Is Power of Attorney So Important for Estate Planning?
The federal Health Insurance Portability & Accountability Act (HIPAA) restricts access to protected health information without the patient's permission. In order to allow your loved ones to be involved in your health care or make decisions if you become incapacitated or need help with procedures, you must file an authorization form with the Michigan Department of Health and Human Services in Lansing. It's helpful to review this authorization with an experienced estate lawyer to ensure that it's completed correctly before filing it.
You’ll need a digital estate plan to provide directives of what you want to happen with your digital assets, including social media accounts, websites, digital photos, intellectual property and other files and documents. Talk with your estate lawyer about how to include precise legal language within your estate plan regarding how to handle your online accounts. This language should authorize your executor to handle your digital accounts after your death, thus preempting any legal roadblocks.
Fortunately, there are tools available to set up directives for your digital accounts while you’re still alive. These platforms allow you to specify the extent of access and control your executor or designated family members will have. On certain platforms likes Facebook, you can designate a legacy contact who can access and manage your data after death.
Sometimes called a letter of intent, this document provides the rationale for instructions in the will. This can be especially important if assets are not being divided equally. Expressing your intentions may help avoid animosity between family members. Consider having a family meeting at your estate planning attorney’s office if this meeting is awkward to do in a family member's home. With your attorney present, a neutral location may be easier and less confrontational than a discussion at home. The grantor(s), or individual(s) creating the estate plan, can draft this letter and then provide it to the estate planning attorney for feedback.
Create a complete list of all financial accounts and named beneficiaries. Each account may have a designated beneficiary or transfer on death provision. People often forget about these beneficiaries, so they should be checked to be sure they are correct.
If you want specific items to go to specific people, list them in your will. In some states, a personal property memorandum can be used for tangible property.
In order to create a digital estate plan, you will need to have a list of online accounts. Password protection sites like LastPass.com allow you to save account links, usernames, and passwords and store them securely with a master password that can be shared with the executor in your estate plan.
Your final wishes should be shared with your executor and family members. If you’ve made prearrangements for a funeral, memorial service, burial, or cremation, make sure that the information is shared. It’s a great relief for family members to know what you want rather than having to guess.
Heirs won’t know if you have life insurance policies unless you tell them. Keep records of your life insurance plans with important financial papers. As you gather them, this is an important time to review your beneficiary designations to ensure that the correct people are listed and you remove anyone who has passed away or who is no longer part of your life.
Records like deeds, assessments, titles, mortgage statements and tax information should be included with documents prepared for heirs.
Tax returns contain a wealth of information for executors, or the person appointed in a will to oversee the estate once the grantor passes away. Share the name of your CPA so they can guide your family through filing final tax returns for your estate. It's also important to gather all other financial information with both income, assets, and debts so that your loved ones can quickly take care of financial issues
Estate planning is about protecting your family and preserving your legacy. It's about planning well and ensuring that the people who depend on you are protected in the event of your incapacity or death. Gathering all of these important documents now ensures that you will have the planning tools needed to include in your estate plan. Book a call today with Leydorf Law Firm to prioritize caring for your loved ones and yourself.
Reference: U.S. News & World Report (Oct. 27, 2023) “12 Documents to Prepare Now for Your Heirs”