The Weekly Scenario: Basic Estate Planning Documents
Question: What are the basic estate planning documents that you would recommend I have?
Answer: In general, most estate plans will include:
• Will and/or Revocable (living) Trust
• Durable Power of Attorney
• Healthcare Power of Attorney (or Advance Medical Directive)
• Guardianship designations (for minor children often included in the Will)
Wills and Trusts
A Will or Trust should be one of the main components of every estate plan, even if you do not have significant assets. These documents ensure property is distributed according to an individual’s wishes (if drafted according to your state laws). Revocable Trusts also help limit probate exposure or legal challenges.
A Will or Trust should be written in a manner that is consistent with the way you’ve left the assets that pass outside of the will. For example, if you’ve already named your child as a beneficiary on a retirement account or insurance policy, for consistency you will typically want to make sure the same asset will pass to the child in the terms of the Will or Trust. However, this may not be the case, so it is crucial to understand in what manner assets will pass.
Durable Power Of Attorney
It’s important to draft a Durable Power of Attorney (POA) so a trusted agent (person you assign to act for you) will act on your behalf when you are unable to do so yourself. Without a Power of Attorney, a court may be left to decide what happens to your assets if you are found to be mentally incompetent, and the court’s decision may not be what you wanted.
This document can give your agent the power to pay your bills, sell real estate, enter into other financial transactions and make other legal decisions as if he or she were you. The POA is revocable at a time of your choosing, typically a time when a person is deemed to be physically able, or mentally competent. The POA is no longer valid after death.
Advanced Medical Directive
An Advanced Medical Directive (Healthcare Power of Attorney) designates another individual (typically a spouse or family member) to make important healthcare decisions on your behalf in the event of incapacity (e.g., you can no longer make health decisions on your own). You may also want to name a back-up agent to serve if the person you designate is unable to act on your behalf.
For those who have minor children, it is very important to have a guardianship clause.
Most Wills I see incorporate this clause, but it is possible that some do not. If you have minor children, picking a guardian is obviously important as the guardian serves a different role than a Trustee. Absent these designations, a court will decide who will serve as guardian and it would be possible that your children live with a family member you wouldn’t have selected.
Letter of Intent
Some people choose to do a letter of intent which is a document left to your executor or a beneficiary. The purpose is to define what you want done with a particular asset after your death or incapacitation. Some letters of intent also provide funeral details or other special requests.
While such a document may not be legally enforceable, it helps inform a probate judge of your intentions and may help in the distribution of your assets if the will is deemed invalid for some reason.
Comment: An estate plan is much more than deciding where your assets will pass upon your death. It is important to designate the ‘right’ individuals to serve in critical roles in the event of a crisis situation.
As always, if you have any questions or would like to learn more, please contact Steve Shane at email@example.com or .
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
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