After in-depth consultation about your specific financial and family situation, an attorney should prepare the following documents to make up your comprehensive estate plan:
A Living Trust allows you to manage your property by transferring the ownership rights of your assets to the trust. During your lifetime, you (and your spouse) serve as the Trustee(s) and beneficiaries, but you also choose any successor Trustees to fulfill your instructions upon your death or incapacity. A trust differs from a will, in that it typically takes immediate effect after death or incapacity. You are allowed to make changes to and even terminate your Living Trust; this is referred to as being “revocable”. A properly funded Living Trust also enables you to reduce the costs, publicity, and time associated with probate, and may even allow you to avoid the process altogether.
A Living Trust-based estate plan also requires the use of a pour-over will. This document lists your choice of guardian if you have minor children. A pour-over will also makes sure that the executor of your estate is able to transfer any assets owned by you into your trust so that they are distributed according to your wishes.
A Will (known formally as a Last Will and Testament) has the primary purpose of transferring your assets according to your wishes. It also usually appoints someone to be your Executor, who, as the name suggests, is the person you choose to execute your instructions. You should also use your Will to designate a Guardian to care for any minor children; alternate Guardians should be appointed as well in case your first choice is unable to serve. A Will becomes effective upon your death, but only after its admission by a probate court.
A Durable Power of Attorney for Property grants the ability to continue your financial affairs should you become incapacitated. Without a well-drafted power of attorney, finding someone to make decisions on your behalf during a period of disability may require applying to a court to have it appoint a guardian or conservator. Like probate, the guardianship process is tedious, costly, and can also take quite an emotional toll.
Durable powers of attorney for property generally come in two varieties. A present durable power of attorney immediately transfers power to your agent (also known as your attorney in fact), while a springing or future durable power of attorney takes effect only upon a later disability. The most common choices for an agent are a spouse or domestic partner, a trusted family member, or a friend, though anyone can appointed. Designating a power of attorney makes sure that your wishes are followed precisely, enables you to choose who will make decisions on your behalf, and takes effect immediately after a later disability.
A different, but related estate planning document is a Durable Power of Attorney for Health Care or Health Care Proxy. Should you lose the ability to make medical treatment decisions for yourself, this power of attorney allows you to designate someone you trust to do so for you. If you wish, you can limit the scope of the decisions your health care agent can make and also provide instructions that he or she has to follow. This keeps “you” in charge: health care professionals must respect your agent’s decisions as if they were coming from you.
A Living Will serves to tell others of the medical treatment you prefer in the event of permanent unconsciousness, terminal illness, or any other situation which leaves you incapable of making or communicating decisions regarding treatment. When included in your estate plan, a Living Will can help provide peace of mind and security and prevent unnecessary expenses and delays should you become incapacitated in the future.
Finally, you should also include a signed HIPAA authorization form with your other documents. This is because certain medical providers in the United States have refused to release medical information on the basis that HIPAA (the 1996 Health Insurance Portability and Accountability Act) does not allow such releases. Even close relatives, such as spouses and adult children, who would otherwise have permission through durable medical powers of attorney have been denied. Signing a HIPAA authorization form will ensure the release of medical information to whomever you choose, including your agents, successor trustees, and family.