probate court. “If you don’t have legal documents to protect your assets, they could end up anywhere,” says Steven, who works at Duetsche Bank in Manhattan.
Financial experts suggest consulting a professional to create a detailed estate plan, which will put in writing where you want assets to go and designate a family member, relative, or trusted adult to execute it. These experts also suggest safeguarding all precious financial documents by keeping copies in a secure place such as a fire proof safe or bank safe-deposit box and by making sure those executing your estate plan know how to access your documents quickly. Here’s a list of documents to consider when developing a life plan.
Will. A will is a legal document that determines where your property, or probate estate, will go after your death. Your will can include real estate, jewelry, cash, and stocks, but cannot dispose of nonprobate assets, such as jointly owned property, life insurance with a named beneficiary, or any asset or financial account that will automatically pass to a named beneficiary.
A will also allows you to name an executor (the person who follows the instructions of the will on behalf of the decedent), typically, a surviving spouse or trusted relative. Some wills also allow you to include a guardian for children, such as a grandparent or sibling, designated by parents, to step in and raise the children if necessary.
If you die without a will, the state of your last legal residence will distribute your assets as it sees fit. A simple will for a single person can cost $400-$600; for married couples, $600-$800.
Living will. A legal document, also known as a directive to physicians, tells loved ones whether you want doctors to take extra steps to keep you alive. The costs of preparing a living will are nominal and are typically added to the costs of having a conventional will or living trust prepared.
Trust. A trust is a legal document used to hold a person’s property for one or more beneficiaries upon death. In most cases, the person names a trustee, a person or institution to manage the trust’s assets in a way that will benefit the beneficiaries.
There are many kinds of trusts. They can be used to eliminate tax consequences, support a surviving spouse or children, or help with special needs like paying a family member’s bills. They can also be structured to protect an estate from ex-spouses and creditors. A revocable trust allows you to control assets and change terms anytime; irrevocable trusts allow such changes while a person is living. Both cost about $700 to prepare. A “Gift-to-Minors” Trust can cost $1,000. (For more information on wills and trusts, see sidebar.)
Power of attorney. This legal document empowers a spouse, relative, or trusted adult to conduct financial transactions for you, mainly if you become incapacitated. The person designated can sign checks or make business decisions as if they were you. A durable power of attorney becomes effective immediately. A medical power of attorney allows