If you do not create your own estate plan, the law will create one for you at death, deciding which relatives get what portion of your property based on the relationship to you of the family members who survive you (known as "intestate succession").  

But that plan may not comport to your priorities.  And if you become incapacitated without an estate plan, the law has a process for appointing a person (known as a "conservator") to make financial and personal care decisions on your behalf.  Again, these decisions and the people in charge of this care may not be in line with your wishes.  

Creating a foundational estate plan ensures that your goals are achieved and that your family is taken care of after you're gone.  

Having a plan can also protect you if you should become disabled or incapacitated. Below are the four estate planning documents that make up the foundational estate plan

Living Trust

A Living Trust allows you to determine how your estate will be distributed and in the vast majority of cases this can be done efficiently without court involvement.  If you have a Will, but not a Living Trust, then decisions about who gets your property can still be taken care of by the Will, but the process for executing your wishes must be supervised by the courts.  

You also want to prevent disputes among your family members.  Your Living Trust can provide your loved ones guidance and clarification regarding your wishes and if you are concerned about particular disputes, an estate planning attorney can help you create incentives in your plan aimed at preventing strife and litigation.  You can also appoint the person you trust the most to administer your estate.

Durable Power of Attorney

The Living Trust is also useful in that it allows a person you trust to manage your property for your benefit (e.g., paying for your care and comfort) if you become incapacitated.  However, in order to have authority to do this, your property must be titled as trust property. 

A durable power of attorney gives your chosen agent the power to take control of your property that is not titled in the Living Trust.  For example, IRAs cannot be owned by a Living Trust, so it is the agent under the durable power of attorney who might take distributions or make investment decisions in your IRA if you become incapacitated.  This person can make financial and legal decisions for you, so it is imperative that you appoint somebody you trust implicitly.  

If you have a Living Trust, generally it is a good idea to name your successor trustee(s) as the agent under your durable power of attorney.

Will / Nomination of Guardian

If you have a Living Trust, you will need a document known as a pourover will.  This document is essentially a backup document in case you pass away with assets that are not titled in your Living Trust.  It instructs the executor of your Will to transfer any such property to your Living Trust. 

Parents with minor children can also nominate a guardian for their children through the Will.  In some cases, a Living Trust may not be necessary and a Will may be sufficient for the at-death transfer of your property.  

As a very generic rule, if you have no minor children, no real property, and the net worth of your assets is below $150,000, a Will may be sufficient for your estate planning needs.  You should consult with a lawyer before deciding whether a Will is sufficient for your goals.

Advance Health Care Directive

Your Advance Health Care Directive (AHCD) provides another person with the authority to make medical decisions for you if you're unable to do so. Again, it is vital that you appoint an individual that you trust to act in your best interests.  

Your AHCD also outlines what you want to happen with your end-of-life care.  You can specify whether you want to receive artificial life support, donate organs, and how your remains are handled (i.e., burial, cremation, etc.).  

It is imperative that you have open discussions with your loved ones about your wishes.  This will make facing the difficult situation easier and lift the burden of making end of life decisions from your loved ones.

Estate planning is emotional, but it is one of the best gifts you can give yourself and your loved ones.

Gadi Zohar, Esq., practices as a trusts and estates lawyer in Palo Alto, California.  He is also an LMFT and CEO of TherapistWill.com, an online professional will solution.  Gadi no longer provides professional psychotherapy or psychological counseling.  

This article is for information purposes only, and is not intended to be legal advice.  The opinions of the author are not a guarantee of any particular outcome.  For advice regarding your individual situation you should consult an attorney.  Gadi welcomes your calls and emails and states that contacting him does not create an attorney-client relationship.