You’ve undoubtedly watched a scene in a television show or a movie where two friends are sitting at a bar and come up with a great idea for a product, or one decides to sell something of value to the other. They grab a cocktail napkin, ask the bartender for a pen and jot down their partnership agreement or bill of sale.
Well, this is real life, and there are some legal documents just too important to write down in such a haphazard manner. At the top of that list for all California residents are your estate planning documents.
Your estate plan spells out everything from guardianship of your children to how you’d like to divide your assets. In fact, there are six key areas your estate plan should address:
1. Durable power of attorney
The durable power of attorney allows someone you have selected to act in your interest when you can’t. The person you appoint can make financial decisions on your behalf.
2. Health care power of attorney
This document allows a person you trust — usually your spouse, partner or a close relative — to make medical decisions in an emergency if you are incapacitated.
3. Wills and trusts
You don’t need $1 million in the bank or vast real estate holdings to have a will or a trust. Everyone should have one. Wills make sure property is distributed as you desire, and trusts can help to stave off legal challenges or lower estate taxes.
4. Beneficiary designations
Some things, such as life insurance proceeds, can pass from your estate to the person of your choice without a will. Therefore, you should make sure that any insurance policies, retirement accounts and such have beneficiaries that are up to date.
5. A letter of intent
This supplements your will and tells your executor some additional wishes, such as funeral arrangements.
If you don’t designate a guardian for your minor children, a judge could wind up doing it for you. Make sure to select guardians, plus contingency guardians, who you are confident will raise your kids the way you would want them raised and have the financial wherewithal to do so.
We don’t like to think about our final wishes, but it’s something we must do. An estate planning attorney could help to make the process as pleasant and productive as possible.