Estate Planning Essentials

There are many good reasons to have have an estate plan in place. Having a plan can provide you with peace of mind, allow you to maintain control, relieve the potential burden on loved ones, protect your dependents, protect assets for yourself and loved ones, and help avoid a costly and time consuming probate process. The following are the essential documents needed to have a plan in place:

Also called a "Proxy Directive" or "Power of Attorney for Health", this document allows you to appoint another adult to make health care decisions in the event that you lack the capacity to do so. Your proxy should be someone you can trust to make the decisions you would make. They should also be aware of your wishes. The easiest way to make them aware of your wishes is to have a living will.

Also called an "Instruction Directive", this document allows you to set forth the end of life treatment you desire in the event that you cannot express your own wishes. Most often, this comes into play when a physician has determined that you are terminally ill, permanently unconscious or permanently helpless. You can choose to withhold or withdraw treatment that would merely prolong dying, whether or not you want cardiac resuscitation, mechanical respiration, artificial nutrition or tube feeding. You can also choose to maximize pain relief, lay out your wishes for organ donation, hospice treatment, and funeral options.

This document authorizes an "agent" to access your medical records and information. The "Health Insurance Portability and Accountability Act" of 1996 (HIPAA) was intended to protect individual privacy, prevent health care fraud and abuse, and provide continued health care coverage for workers after leaving jobs. This Act prevents most people from accessing your records and information without a release. In many cases a health care proxy cannot access the records they need to make decisions for you, and a power of attorney may not allow for full access to information in order to review and pay medical bills. 

This document allows you to grant power to another person to handle financial and other transactions on your behalf. When POA is durable, it becomes effective as soon as it is signed. The alternative is to make it "springing", to go into effect only in the event that you become incapacitated. A POA can be "general" to allow for broad power or "limited" to allow for only specific acts or events. It is VERY important when choosing a POA that the person you choose can be trusted. They will potentially have control over all of your finances. 

A set of final instructions that take effect after your death for the distribution of property and provisions for dependents. When properly drafted and executed, this document allows you to provide guidelines for how and when you want property distributed, what conditions, if any, you want to place on an inheritance. Do you want your child to finish college before inheriting? You can also choose the people you want to fill the roles of executor, guardian, and trustee.

  • Executor – administers your final estate
  • Guardian – takes care of your dependents
  • Trustee – manages funds “in trust” left to dependents

These roles can be filled by the same person, or you can choose different people based on particular strengths and weaknesses. Perhaps the person you want to be guardian of your children isn't necessarily the person you would want managing their money.