Four Must Have Documents Even if You Don't Think You Need an Estate Plan
Even if you think you don't need an estate plan, there are four things you need to make sure you have in place in case you become sick or when you pass away. If you don't do it for yourself, then do it for the sake of your loved ones who will be responsible for looking after you and your affairs.
Health Care Power of AttorneyThis is a simple document that allows you to name whom you wish to make health care decisions for you in the event you cannot make your own health care decisions. You can also name backups, just in case the primary person cannot assume the responsibility if and when the time comes. In addition, you can specify your wishes concerning organ donation and life support. It's important to have a health care power of attorney in the event you suffer a serious accident or illness that renders you incapable of making your own health care decisions, or if you are in a coma or on life support. And it's especially important in the event you develop dementia, Alzheimers, or any other mentally debilitating illness. A health care power of attorney can only be executed if you have the mental capacity to sign legal documents. This means it's usually too late to set up a health care power of attorney after suffering an accident or being diagnosed with a mental illness.
The State of Illinois has a standard document, called a statutory form, that can be completed and witnessed. It's best to have it notarized as well,
Property Power of AttorneyA properly drafted property power of attorney allows you to name someone who can take care of all your financial affairs if you become too sick to take care of your own affairs. This includes anything from granting access to a safety deposit box to bank accounts, the ability to manage health, property, auto, and life insurance, take care of a mortgage, work with banks and other financial institutions, pay bills, access your online accounts, email, and manage social media sites, and address taxes, health care payments, long term care planning, etc.. The document should be durable, meaning it remains in effect if you become mentally incapacitated.
The State of Illinois has a standard document, called a statutory form, that can be completed, notarized, and witnessed.
Last Will and TestamentEven if you don't think you have a lot f money, you should still have a Will, where you identify who should receive your possessions when you pass away. If you don't make your choice known in a written, properly executed Will, the state's default plan will apply, and the state will determine who will receive your possessions.
If you have children under 18 or mentally incapacitated adult children, an equally important reason for you to have a Will is to name a guardian who can take care of those children in the event you can no longer do so. You love those children and would do anything for them, so make sure you plan for who will take care of them and how they will be provided for if something happens to you.
You should also identify your wishes for a funeral and burial or cremation in a Will.
To be valid under Illinois law, a Will must be signed before two witnesses and notarized.
Beneficiary and Payable on Death DesignationsThese days, most people have some form of retirement assets. It's important to make sure you have a beneficiary or payable on death (POD) designation on each account, such as an IRA or 401k. Beneficiary designations can also be added to some brokerage and bank accounts, as well as certain savings bonds. Other places where a beneficiary is typically named is for a life insurance policy, annuities, and CDs. Be sure to name both a primary and secondary (also referred to as contingent) beneficiary, just in case your primary beneficiary does not survive you or is unable to receive the funds for any reason.
Once you have verified all your primary and secondary beneficiary designations, write them all down on a single sheet of paper, along with the name and contact information of the financial institution and account number for each account. This document should be kept with your Will and power of attorney documents. This is an important step that should not be overlooked.