Five Documents to Protect Your Wealth

by BOK Financial Private Wealth

You may have a good idea of where you want your wealth to go after you pass away. But if you’re not careful — and don’t have the right protections in place — you might end up costing your loved ones unnecessary time, money and grief.

“You can’t assume that your estate will magically come together,” says David Sego, managing director of BOK Financial Private Wealth. Having certain legal documents and arrangements in place will help ensure that your property is distributed according to your wishes and prevent family members from having to make tough, emotionally distressing decisions on your behalf.

Five key documents and legal arrangements are essential to building a strong estate plan:

1. Durable Power of Attorney
Naming a trusted person as your power of attorney — whether it be a close family member, friend, or dependable professional — helps ensure that your finances will be managed if you’re unable to manage them yourself. “That could mean taking care of paying your expenses, overseeing your investments, funding a trust or filing your taxes,” Sego says. It’s important that the power of attorney be “durable,” meaning the designated person can continue to make decisions on your behalf if you become physically unable or mentally incompetent to handle matters.

2. Advanced Medical Directive
This document outlines which medical or life-extending procedures you want, or don’t, in case you’re unable to make such decisions for yourself in the future. It also allows you to identify someone to provide informed consent, if you are unable. It can reduce uncertainty and stress for your loved ones, who may feel uncomfortable making such decisions for you, Sego says.

3. Last Will and Testament
Your will provides a clear legal guide of how your assets — such as real estate, investments or personal belongings — will be distributed upon your death. If you do not leave a will, state law will determine how your assets are distributed. (Keep in mind that the beneficiaries you name for certain accounts — such as your retirement accounts and insurance policies — override your will. So it’s important to keep your beneficiary designations updated and ensure they are coordinated with your estate plan.)

4. Trusts
There are many types of trusts tailored to different estate-planning needs. Some can minimize estate taxes, while others can help achieve specific goals, such as financially supporting a disabled child or children from a first marriage. One common trust, a living trust, is revocable, meaning you can change the terms and beneficiaries after it’s established. Other trusts are irrevocable, meaning no one can generally change the beneficiaries and terms once the trust is established.

You can put all of your assets into a trust — including your home, investments and bank accounts — and it provides greater continuity over the disbursement of your assets. Property that is in your trust’s name during your life will avoid probate. Many trusts name a corporate trustee, such as a financial institution, to ensure the assets are professionally and expertly managed.

5. Letter of Instruction
This is a private letter — not a legally binding public document — that explains to your heirs your thoughts behind your will and trust. It can reduce misunderstandings among heirs by articulating your final decisions and directions. For example, the letter might explain why you left a generous sum to charity or why certain assets were put in a trust rather than given outright.

Store these five key documents in a safe place, and review and update them regularly. It’s also important to compile a full list of the documents and where they can be found. “People often need to find these documents at a time of grief,” Sego adds. “You want to make sure your heirs can easily find them when they need them most.”

Disclosure The opinions expressed herein reflect the judgment of the author at this date and are subject to change without notice and are not a complete analysis of any sector, industry or security. The content in this document is for informational and educational purposes only and does not constitute legal, tax or investment advice. Always consult with a qualified financial professional, accountant or lawyer for legal, tax and investment advice.