Key Legal Documents for Your Estate

Famous people are sometimes all too human. You might think that Hollywood stars must have a team of financial professionals providing guidance and insights. But that’s often not the case. 

Take Aretha Franklin, who died in 2018. A court determined that four pages, handwritten by Aretha, discovered in her couch represented her actual final will.¹

As surprising as that may sound, if you don’t take steps to outline your wishes using a comprehensive estate strategy, a court may be put in the position of deciding “who gets what” just like in the case of the Queen of Soul.

As we work with people, we first want them to understand that some base-level documents form the foundation of a solid estate strategy. Once those documents are in place, they can consider more advanced tools depending on your situation. But getting the base-level documents together is a critical first step.

Here’s a brief overview of the documents that form the cornerstone of an estate strategy.

• A will: The most basic estate document is also one of the most overlooked. Less than 50% of adults who earn $80,000 or more have a will. A will is a legal document that outlines how you want your property distributed and who will care for your minor children.²

“Bear in mind that property distributed through your will is subject to probate, which can be a time-consuming and costly process,” explained Mick Owens, who wrote the popular book, Diamond of Life: The Five P’s of Success and Significance.

• Healthcare power of attorney: This document will designate someone as your spokesperson for healthcare decisions if you are unable to communicate your wishes. Your spokesperson will address questions about your healthcare, including medical facilities and treatments. 

By contrast, a living will only applies to decisions regarding “life-sustaining treatment” in the event of your incapacity. It’s important to remember that laws governing living wills vary from state to state, so if your living will was created in another state, you might consider updating the information. 

• Durable power of attorney: This involves a legal agreement that enables you to designate who will make your legal and financial decisions if you become incapacitated. The agent can have broad legal authority or more limited decisions.

Pro tip: Unlike the standard power of attorney, durable powers remain valid if you become incapacitated, explained Mick Owens.

• Letter of instruction: This document is not legally binding in any way. It is more of a plain English cheat sheet that can help anyone involved in the management of your estate. Your letter of instruction can outline who should get what items that hold sentimental value. An alternative to a letter of instruction is Everplans, an online software tool that allows users to make arrangements for their estates.

We introduced Everplans to our clients several years ago and have seen the benefits of the estate-strategy tool. If you would like to learn more, we are happy to send you an invite to Everplans. If you’re not ready to start with Everplans, on your website (www.cfdadvisers.com) we have a Memorial Services document that you can use. 

Keep in mind that the documents listed are base-level documents that can play a role in any estate. Other documents and strategies may be needed from time to time, and we can provide you with an overview of what other tools may be appropriate in your situation.