What Documents Should Your Estate Plan Include?

Jun 13, 2022

Estate planning (the process of getting your affairs in order, or legally clarifying what will happen to your assets and your loved ones if you pass away or become incapacitated) can be complicated, and confusing. This is partially because there are so many types of legal documents available to include in your estate plan. But how do you know which ones you need, and how can you guarantee that your estate plan will actually do what you intend it to do when your family needs to use it? Let’s take a closer look at what tools you need to protect everything that matters most to you. 

Isn’t A Will Enough?

People generally realize that they need to make a will. The pandemic has partially contributed to that realization of mortality – a LegalZoom survey published in October of 2020 found that 12% of the 62% of Americans who do have wills had created theirs in the past 12 months. Even though most people understand that they should have a will because more time isn’t promised to anyone, less people get around to actually making one. Note that the above statistics reveal 38% of Americans – roughly 126 million people, if you go by 2020 census data – haven’t made a will yet. 

Most people who procrastinate may think that they’re not wealthy enough to really need a will, or that their money will automatically go to their next of kin even if they don’t have one. Those assumptions aren’t correct. Having a will is extremely important for anyone, regardless of how much money you have; it makes your wishes known and provides legal direction to your loved ones. Without a will, the state of Texas’s “intestate” laws will determine how your money and possessions are divided up among your loved ones, which may not be the way you would have wanted. 

However, there is also another popular misconception people hold, which is that having a will is all you need before you pass away; this assumption isn’t correct, either, and can prove to be detrimental to family members left behind with no protection from probate. Probate is a Texas court process by which a deceased person’s assets are officially and legally transferred to their beneficiaries. It’s expensive, time-consuming, and stressful. Probate depletes the inheritance you left behind for your family and can even cause conflicts among them. It requires a lot of paperwork, and is just not something that you want your family to have to go through at the same time that they’re grieving your passing. 

Wills aren’t enough to stop probate from needing to occur, as the will has to be validated as part of the probate process. You need other legal documents in place if you want all of your assets to avoid probate and be transferred directly to your spouse, children, grandchildren, and other family members. 

What Is Typically Included In A Comprehensive Estate Plan?

A comprehensive estate plan includes all of the documents you need to secure your estate. What documents you will need depends on your unique life circumstances; everyone’s life is different, and everyone’s estate plan will look different based on how much they have in assets, what their family dynamics are like, etc. However, most estate plans will include some variation of the following tools:

  • Will   

As mentioned above, a will lays out your wishes for the distribution of your assets and care of your dependents. There are many different types of wills, including a last will and testament, pour over will, simple will, joint will, mirror will, living will (which is actually an advance directive) and more. For the will to be declared valid, it must comply with state laws; it also cannot go into effect until after your death. 

  • Trust

A trust is a way to own assets outside of your name; once transferred to the trust, they belong to the trust (not to you), but can be managed by a trustee according to the terms of the trust that you set. Trusts can avoid probate, establish rules for beneficiaries who receive an inheritance from the trust, preserve assets from creditor attacks, and reduce estate taxes; these are extremely valuable legal tools. There are many different types of trusts, including revocable trusts, irrevocable trusts, marital/A trusts, credit shelter/bypass/B trusts, charitable trusts, special needs trusts, testamentary trusts, and more. 

  • Power of Attorney

Wills and trusts are important, but death isn’t the only difficult event that your family could face. What if you become incapacitated? That’s where some of the other legal documents in this list come in, including power of attorney. A power of attorney gives someone you choose the power to act for you if you are unable to make decisions for yourself. They can be given any amount of authority you designate to handle your property, finances, or medical care. There are different types of power of attorney, including general power, limited power, durable power, health care power, financial power, and more. 

  • Health Care Proxy

A health care proxy is similar to power of attorney, but only has the power to make medical decisions on your behalf. Theoretically, you could designate one person to be your health care proxy and give one person power of attorney over your finances, but this is not recommended as the two could disagree over the right decisions to make. 

  • Advance Directive

Also commonly referred to as a “living will”, an advance directive is an estate planning document that explains how you want medical decisions about your care to be made if you can’t speak or make decisions for yourself. While a power of attorney/health care proxy gives someone the right to make those medical decisions for you, this document gives them guidance on what decisions you want them to make and can take a tremendous burden off your family.

Your estate plan should also include personal documents that may not do anything legally, but that will certainly make it easier for your loved ones to find what they need,  sort through the legalities after your death, and move forward. You should include documents with a list of your digital logins and passwords, funeral instructions, titles and property deeds, copies of insurance policies and bank account information, and more. 

Do You Need A Lawyer To Draft Your Estate Plan?

Some people think that they can make an estate plan on their own by following estate planning checklists and downloading document templates they find online, but that’s not advisable for a number of reasons. 

For one thing, you don’t know everything about Texas estate planning and probate laws. You’ll spend a lot of time researching how to create an estate plan, which is time that could be spent enjoying your life in the present instead of preparing for the future. Templates or legal advice you find online may not be compliant with these laws, and will definitely not be customized to your unique situation, so the documents you draft might not be legally valid and offer the protection your family and assets need.

People tend to try to “DIY” estate planning because hiring a lawyer can be expensive, but not hiring a lawyer can end up costing your family much more – thousands or tens of thousands of dollars more – in the long run. Lawyers go to school and practice for years because that’s what it takes to draft a custom, comprehensive estate plan that includes all the right legal documents and that will give you merited peace of mind.

Why Choose Our Texas Estate Planning Attorney To Help You?

Attorney Michelle E. Murphy has spent over 20 years helping Texas families create comprehensive estate plans that are personalized to their needs. Her legal knowledge and experience allows her to draft effective wills, trusts, powers of attorney, health care proxies, advance directives, and other legal documents you may need. If you have a blended family, a family member with special needs, investment properties, a family business, or anything that requires complex planning, she can help you think through the best way to secure what matters most to you! She can ensure that your estate plan will bypass probate and minimize taxes. Attorney Michelle E. Murphy will take the time to get to know you and your family, answer all of your questions, and help you understand all of your legal options. Call today to schedule a free consultation and learn more about what her firm can do for you.