It is a common misconception that only the very wealthy need an estate plan. But the reality is most people can benefit from one. It puts you in control of what happens not only after death, but also during your life if you become incapacitated.
With an Estate Plan, you choose who acts on your behalf when you are unable; you make decisions regarding life support, medical decisions and how your assets are divided upon death. You retain the power to revise, amend, or revoke all documents at any time during your lifetime (unless incapacitated), and your personal care and financial information are shared only with those you choose, who have the power to make crucial decisions without court intervention. Also, probate can be avoided.
Without an Estate Plan, your family will need to petition the court for a guardianship to assist with your medical and financial needs if (when) you become incompetent. Your family or court decides who acts on your behalf. A probate judge will monitor your assets and all transactions. Your family will need court approval to make the majority of financial decisions.
For these reasons, every practicing attorney should have at a minimum of these essential estate planning documents:
1. A Durable Power of Attorney (DPOA) allows someone to act on your behalf and remains valid upon incompetence. The DPOA can be tailored to allow as much or as little power to the named individual as desired.
2. A Living Will outlines treatment (or withholding thereof) if you are in a terminally ill or vegetative state or are without the capacity to make medical decisions yourself. It also provides your family doctor and loved ones with instructions as to whether or not you want to terminate life-prolonging procedures when you are terminally ill. It can include specific comfort care and religious preferences.
3. A Designation of Healthcare Surrogate names an individual, most likely a family member, to make health, medical, and surgical decisions on your behalf if you become incompetent or disabled. It is also known as a medical power of attorney for health care. It also includes a “HIPAA waiver,” which is a waiver of the medical privacy requirements to eliminate potential legal barriers to communications between your agent and your health care providers.
4. A Last Will describes how your assets are divided upon your death, but to avoid probate you and protect your family’s privacy; you most likely will want a “pour over” Will that places every asset you own into your Revocable Trust.
5. A Revocable Trust is a contract between you as “Grantor” and yourself or someone you trust as “Trustee” to manage the assets you place in the trust. Most of the trusts we do for estate planning purposes are revocable, and the Trustee and the Grantor are the same people. No one else (a successor Trustee) becomes involved until after your death or incapacity.
The Trustee holds legal title to property for the benefit of your beneficiaries. Unlike the terms of a Will admitted to probate, the terms of your trust remain private. Only you, your Trustee, and your beneficiaries (after your death) can have access to the trust. If you create a revocable trust, you can amend or revoke at any time without court approval.
While it is generally recommended that everyone have these documents in place, they are especially important if you are unmarried and have a “significant other” or other close friends. Absent these documents, a family member can almost always prevail and can even exclude that significant other or friend from accessing you and your assets.