There are five essential documents that virtually every adult should have to meet their responsibilities to others:
1. Will: A will is the only document in which you can name a guardian for minor children. Your will also tells how you want your estate distributed when you die and whom you want to manage your estate until it is distributed to your heirs. Trusts can also be used to manage your estate and make distributions to heirs. So even if you have a trust, you should also have a will in case assets have not been funded into the trust or you have minor children. Trusts are more complex but offer greater flexibility and sometimes greater control.
2. A Letter of Instruction: Contains information on financial documents, bank accounts, funeral arrangements, how to contact financial and legal advisers, and who to notify about your death. It can also be used to distribute non-titled property such as jewelry, china, silverware, collections, etc. If you use a letter of last instruction to distribute non-titled property, be sure to mention that you are doing so in your will and in your trust, if you have one. The advantage of handling non-titled property this way is that you do not have to amend your will or trust every time you give something away, sell it, or buy something new.
3. A Durable Power of Attorney for Financial Issues: Authorizes an individual to conduct your legal or financial affairs on your behalf should you become incapacitated. You do not have to name the same person to take care of your financial issues and your health care.
4. A Living Will: States what medical actions you do not want taken to keep you alive if you are terminally ill or incapacitated. This may not be necessary in some states if you have a durable power of attorney for health care (health care proxy) that contains this information.
5. A Durable Power of Attorney for Health Care (also known as a health care proxy): Designates someone to make health care decisions for you from arranging care and working with doctors and hospitals to making life-prolonging decisions or exercising the wishes similar to a living will.
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