Secure Your Legacy: The 9 Essential Estate Planning Documents You Need
Estate planning is an important activity that everyone should take very seriously. While many people still believe the myth that estate planning is only for the wealthy, it actually provides benefits to people of all classes. Regardless, having the right legal documents in place is critical.
Last Will and Testament and Codicil to WillThe Last Will and Testament, or just a Will for short, is the most basic form of estate
planning, and something that everyone should have in place. A Will allows you to
specify what you want to happen after you pass away. This can be a fairly broad list of
desires that identifies what you want to happen to your property, financial assets,
children, and even where you want to be buried. This type of document is very
affordable and easy to put in place, so there is really no excuse for not having one once
you are an adult living on your own.
It is a good idea to update your Will anytime a major event happens in your life. For
example, if you have another child, get married or divorced, want to remove someone
from the Will, or you attain some significant assets, you’ll want to update the Will itself.
If, however, you only need to make a small amendment to an existing Will, you can do
that with a codicil. This is a faster and easier process and will allow you to “tweak” your
Will as often as needed.
TrustsTrusts are one of the most important documents when it comes to estate planning.
Trusts are a way to arrange your property or other assets so that it is “owned” by the
trust rather than directly in your name. This offers a variety of protections for your assets
and your loved ones. While the term “trust” is commonly used in estate planning, there
are actually quite a few different types of trusts. Knowing which trust you need to use in
your specific situation is important as they all have different legal purposes. The
following are some of the most commonly used types of trusts to be aware of:
• Revocable Trust – A revocable trust, which is often known as a living trust, is a
trust that is meant to be in place for quite some time while you are still living. It can
be modified or even revoked entirely at any time. This means you can make
updates as your circumstances change while still being confident that when you
pass away, your estate will enjoy the many benefits of a trust.
• Irrevocable Trust – An irrevocable trust can’t be altered or revoked after it is
created. Even the person who created the trust and put assets into it can’t make
changes, so keep this in mind when creating this type of trust. There are benefits to
an irrevocable trust including tax advantages and predictability. An irrevocable trust
is most commonly used by those with larger estates.
• Asset Protection Trust – An asset protection trust is made specifically to help
protect assets from future claims of creditors. This is another option that is most
commonly used by those with large estates who may be worried about the risk of
creditors coming after their assets either while still living or after they have passed
• Charitable Trust – As the name implies, a charitable trust is set up specifically to
donate a portion of your estate to a charity of your choosing after you pass away.
Giving through a charitable trust allows you to direct how you want it to be used so
you can ensure it is used properly.
• Special Needs Trust – If you have a special needs child (either a minor or an
adult) who you want to take care of even after you are gone, a special needs trust
is the perfect option. This will allow you to ensure your assets are available to
provide for your child without having to give them direct access to the money.
It can be difficult to know exactly what type of trust is right in what situation, which is
why it is always important to work with an experienced estate planning attorney. For
many people, it will be best to have multiple different types of trusts in place to ensure
all your wishes are honored.