Clients often ask me what documents they should have in their estate plan. The answer is a bit lengthier than they would have thought. If you imagine that you will be leaving your home to go to a place that is out of the country for the next few months and you are preparing a friend to take over for you while you are gone, this is a good start. To put it in more black and white terms, I have compiled a list of 12 documents that should be available to the friend or loved one that will take care of your estate should you no longer be able to do it yourself.
A Trust: (At least in California) I practice law in California, if you have a house or life insurance and minor children you should create a trust. This trust avoids court and allows for someone to take over financially for you should you become incapacitated (at least over the property that is in the trust).
Power of Attorney: A power of attorney allows an agent named in the power of attorney document the ability to take care of any financial assets that are not in the trust should you become incapacitated. Often it is used as a funnel to catch assets that should have been transferred into the trust but weren’t transferred earlier.
Will: When you create a trust, typically you create a special kind of will called a “pour-over” will. This will acts as a funnel for property left out of the trust after you pass. It can also name guardians for minor children.
Letters to loved ones or those in charge: People get so caught up in the legal ramifications of incapacity or death that they often forget to deal with the emotional trauma. Writing a final love letter to loved ones is a great way to show how much you love them. You can also write an instructional letter to a trustee if you want them to have more instructions on the purpose of your trust, so they have guidance in how to distribute discretionary funds.
Personal Property Memorandum: This can either be a legally binding document or simply a list of wishes depending on how your plan is set up, but basically this document itemizes the most important assets (at least sentimentally valuable) and who should receive those items. This document may also contain the location of these items (including safe deposit boxes).
Memorial Arrangements: Whether you have set up official memorial arrangements with a mortuary or you simply have wishes written out on a piece of paper, you should keep these documents with the rest of your estate plan so that the loved one who needs to plan for these services can easily locate them.
Government Identification documents: birth certificates, marriage documents, immigration papers, passports and the like should be kept in a place with all your other important documents. Our office recommends your estate planning binder.
Financial Documents: Some law firms recommend asset lists that attach to your trusts. I find that these lists are often out of date and incomplete with things scribbled in the margins, etc. I find it best to keep one statement from each financial asset. This statement could be the statement that confirms the asset has been transferred into a trust or just a monthly statement, but these documents usually come with addresses and phone numbers that are helpful to those who will take care of your assets when you are no longer able. When you open a new account, you add a statement for that account in your binder. When you close an account, you take the statement associated with that account out of the binder. This way the “asset list” is up to date.
Password list: As our country has shifted to paperless billing it has become more vital that you allow your successor agents access to your digital accounts, like email and bank accounts. This list should be updated at least annually to ensure that they are up to date.
Business documents: You should keep a copy of your business documents with or near your estate plan so that they can be easily located if there is an emergency or death.
Prior Years Tax Returns: These documents can help an agent caring for your finances the ability to more easily prepare taxes for you and your estate.
Family History/ Photos: Typically, when you think of estate planning, you may think of old dusty legal documents, but your estate plan should include a living set of documents that are updated regularly, similarly, they can provide a link to your past in the form of family photos and family history.
If you would like to start gathering your estate now, please call us at (951)304-3431.