5 Estate planning documents all parents should have in place

When you're a parent, you can't imagine a time when you won't be around for your children. The reality is, however, that there is a possibility that during your lifetime, there might be a time when you are incapacitated or otherwise unable to make decisions about your care or your assets.

With that in mind, the best gift you can give to your children is a well thought-out estate plan. Kelly Phillips Erb lists the estate planning documents all parents should keep in one place.

1.Will

A will is a formal document which controls the disposition of probate assets following your death. Probate assets are those things that you own in your own name; non-probate assets, such as joint accounts or life insurance, do not pass according to your will but rather by titling or designations of beneficiary.

“WILLS AREN'T JUST FOR THE RICH.”

Wills aren't just for the rich. In addition to the assets you associate with wills — like bank accounts in your own name — a will allows you to designate how your personal tangible property will be distributed. You can think of personal tangible property as things in your home you can touch — your jewelry, furniture, car and other personal items.

You also have the opportunity to name fiduciaries under your will. This would include an executor, who would be responsible for handling the administration and disposition of your estate — including the filing of any income and inheritance tax returns. This would also include a trustee, who would manage any trusts created under your will for your children, who might not be old enough to properly manage assets on their own. Finally, if your children are still minors, you are able to designate a guardian under your will, who would care for your children after you are deceased. The executor, trustee and guardian can be — but don't have to be — the same person or persons. All of your fiduciaries should be a person or persons that you trust to make decisions.

2. General power of attorney

A general power of attorney is a document that allows you to name an agent to handle your financial affairs in the event that you become incapacitated or are unable for any reason to administer your finances during your lifetime. There are two kinds of powers of attorney — a durable power of attorney, which survives incapacity, and a nondurable power of attorney, which is generally used for limited transactions such as the sale of a home. A power of attorney can be immediate or springing — an immediate power of attorney is effective at signing while a springing power of attorney is effective only upon a triggering event, such as incapacity.

3. Healthcare power of attorney

A healthcare power of attorney is a document that allows you to name an agent to make health care decisions for you in the event you are incapacitated. A healthcare power of attorney only acts on your behalf if you are unable to do so and have not otherwise communicated your wishes. It's important to keep in mind that a healthcare power of attorney does not supersede your living will (see immediately below). Your healthcare power of attorney doesn't have to be a family member and should be someone you trust to understand your wishes and act accordingly.

4. Living will

A living will doesn't involve your assets at all, but rather focuses on your end-of-life care.

Also called an advance directive, health care directive, or a physician's directive, a living will allows the people you care about and your medical professionals to know what type of care you do (or don't) want to receive should you be permanently unconscious. A living will is only effective when you are not able to express your own wishes.

5. Temporary guardianship

In some states, you can also execute a temporary guardianship for your children. If you need to turn over the care of your children temporarily to another adult because you are having a medical procedure or are out of town on business, you may want to set up temporary guardianship. A formal temporary guardianship allows another person the right to approve medical treatment, sign permission slips for school or otherwise make decisions for the benefit of your children while you are not able to care for them.

Nobody wants to talk about estate planning when you're young. But you should — especially if you have children. Do yourself and your family a favor and make sure you have your estate planning documents in place now so that you don't force your family to worry about it later. If you need assistance with these documents, I’m available to meet with you.

Estate planning: it's ok to be charitable

Christopher W. Yugo, Times Business Columnist answers a frequent question in estate planning:

Q: I intend to leave all of my money to two charities but I'm concerned that my children will object. I'm worried they will challenge the will. Is there anything I can do to make sure that my wishes are carried out? Should I name someone other than a child executor?

A: First off, you can leave your property to whomever you want. If you want to leave it to a charity or the neighbor, you can do it. Now don't get me wrong, I understand why a child might be upset they are excluded. However, that doesn't mean that you can't or shouldn't do it.

As I've written before, will challenges are rare and successful will challenges are even rarer than that. There really needs to be a compelling reason to set aside a will. For example, a will can be set aside if it can be shown that the testator was subject to undue influence or if he wasn't competent to execute a valid will in the first place.

I wish there was a magic bullet to prevent a will challenge, but there isn't. If your kids want to challenge your will, they can do it. Fortunately, or unfortunately if you are the child, will challenges are expensive. That in itself could be enough to discourage a challenge.

I suggest you discuss your options with your attorney. He or she will be able to help you plan for trouble. Your attorney may suggest you obtain a letter from your doctor demonstrating your competency or perhaps suggest a video recording of the will signing be made. The attorney will almost certainly want to meet with you alone so the chances of a successful undue influence claim are greatly reduced. The key is bringing your concerns to your attorney's attention.

As for naming someone other than a child personal representative, I'm kind of torn. On one hand, naming a child personal representative may help your family understand why you were so charitable. On the other hand, it seems a little twisted to request a child you disinherited to administer your estate. If you decide to name someone other than a family member, you could contact your bank's trust department and inquire about it serving as personal representative. The bank will do its best to assure your instructions are carried out.

Finally, you might consider discussing it with your family ahead of time so they aren't surprised when you pass. Maybe explaining to them why you are leaving your property to the charity will help them understand and perhaps avoid hard feelings, and possible litigation.