Estate planning is an important legal process for every adult, regardless of age or net worth. While it accomplishes the task of planning for the disposition of your assets, the real goal of estate planning is achieved through the peace of mind it brings to you and your family. Although each estate plan is as unique as the circumstances of the individual or family for whom it is drafted, there are five basic documents which serve as the foundation to each plan.
Last Will And Testament
A Last Will and Testament is generally the first step in creating an estate plan. It accomplishes three major goals.
First, the Will directs how your real estate, personal property, and financial assets will be distributed after your death. Because certain types of asset titling, beneficiary designations, and transfer/pay on death designations actually supersede the terms of your Will, it is important to coordinate each of these with the Will to ensure your assets flow in the manner intended.
What if You Die Without a Will?
If you die without a Will, state intestacy laws determine who receives your assets and in what shares, which may not be consistent with your wishes. Intestacy laws also do not address the complexities involved in situations such as blended families or disabled beneficiaries, potentially creating disaster for your survivors.
Second, your Will allows you to choose who will administer your estate. This person, called your Executor, is responsible for handling your final affairs and ensuring the wishes set forth in your Will are carried out. Without a Will, there may be disagreement about who should serve, leaving it to a court to decide.
Wills for Parents with Minor Children
Lastly, for parents of minor children, a Will may be used to establish a trust for your child’s assets and to designate the guardian who will have custody of your minor child. As with the Executor designation, a court will decide who oversees your child’s personal and financial matters if these important details are not specified in a Will.
Durable Power Of Attorney
A complete estate plan involves planning not only for death, but also for incompetency or incapacity. A durable power of attorney designates another person to manage your financial affairs during life if you become unable to do so for yourself. The document may be tailored to allow broad authority for all financial matters, or made narrower for specific purposes.
You must be competent to grant power of attorney to another person. You will be too late if you wait until you are no longer competent and in need a power of attorney before putting one in place. In such a situation, a court will be required appoint a guardian of your estate, who may not be the person you would have chosen for yourself.
Health Care Power Of Attorney
A Health Care Power of Attorney is used during life to allow another person to make medical decisions on your behalf if you are incompetent or incapacitated. Without a Health Care Power of Attorney in place, your spouse or the majority of your relatives may be able to make your decisions. However, in the event of family conflict or a prolonged period of incapacity, it will be necessary for a court to appoint a guardian of the person to make your decisions.
As with the Durable Power of Attorney, you must be competent when executing a Health Care Power of Attorney. Waiting until you are no longer competent to make decisions generally means it is too late, and a guardianship alternative will need to be pursued.
Advance Directive For Natural Death (Living Will)
An Advance Directive for Natural Death, or Living Will as it is more commonly known, sets forth your instructions for end-of-life medical care when you are unable to communicate those wishes for yourself. This document will direct your medical providers to withhold or withdraw life sustaining measures when it is determined that nothing further can be done to save your life and that death is imminent.
While a Living Will is not required for your end-of-life decisions, it is a valuable tool to be used in an otherwise emotional time when your family may not know your wishes, may be in conflict, or may not be thinking clearly. It will ensure that you experience a natural death, consistent with your wishes, and relieve your loved ones from the burden of a difficult decision.
Authorization For Use And Disclosure Of Protected Health Information
Also called a Medical Authorization or HIPAA Waiver, an Authorization for Use and Disclosure of Protected Health Information authorizes your health care providers to release your protected health information to your Health Care Power of Attorney and various other individuals of your choosing.
With federal HIPAA privacy laws prohibiting the disclosure of certain health information without patient consent, this document ensures your powers of attorney receive the necessary information to make vital decisions for you if you’re unable to act for yourself. Without this document in place, a court order may be needed to obtain the release of such information.
The Time To Begin Planning Is Now
It can never be too early to start your estate plan, but unforeseen life events can make it too late. The important part is to simply take the first step by putting your plan in writing. Then, as the circumstances in your life change with time, so should your estate plan.
If you’re unsure where to begin, or need help navigating a changing course, we’re here to help. Our estate planning attorneys provide comprehensive planning tailored to your specific situation, and are dedicated to making the process as smooth and stress-free as possible.
For more information about estate planning, please visit our website or call us to schedule an appointment.
