What is an estate plan?

Estate planning is an important area of law that prepares and organizes your final affairs. However, some people are unfamiliar with the documents included in an estate plan. A comprehensive estate plan generally includes either a revocable living trust or a last will & testament, and a general durable power of attorney, a medical power of attorney, a living will, a HIPAA authorization, and an appointment of guardian for minor children. The purpose of each of these documents is explained below.

Revocable Living Trust

A revocable living trust is a type of “entity” that either owns or becomes the beneficiary of your assets. Trusts are your own private document (unlike a last will & testament) that establish guidelines for the management of your assets during your life, as well as for the distribution of your assets upon your death. While you are alive, you may serve as the trustee of the trust (the person who manages the assets), and name successor trustees to manage the assets when you are no longer able to manage the assets. There are many ways to structure revocable living trusts, and they do, on occasion, offer tax savings and creditor protection for your beneficiaries.

Last Will & Testament

Your last will & testament is a legal document that nominates a person, known as the personal representative, to administer your estate upon your death, and names the beneficiaries who are to receive your assets. A will provides you with the opportunity to choose your own heirs and decide to whom you wish to leave your legacy. Your will directs who is to receive your real property, financial assets, and your tangible personal property, such as household goods and furnishings, jewelry, antiques, heirlooms, and similar items. Without a will, your estate will be subject to the state intestacy laws. These intestacy laws determine who is to serve as your personal representative as well as who is to receive your property. Also, if you have minor children, you may nominate a guardian to care for your children until they reach the age of majority.

General Durable Power of Attorney

A general durable power of attorney is a legal document that allows you to authorize a third party, known as an agent, to act on your behalf to make financial decisions if and when you are unable to make such decisions on your own. In the event you become incapacitated or are simply unable to attend to your financial affairs, your agent may step in and assist with your everyday personal financial matters. This document may authorize your agent to act immediately upon signing or upon a stipulated event, such as your subsequent incapacity.

Medical Power of Attorney

A medical power of attorney is a legal document that allows you to authorize an agent to act on your behalf to make medical decisions if and when you are unable to make medical decisions on your own, such as when you are under anesthesia or otherwise unconscious or incapable of making a decision.

Living Will

A living will is a written document that allows you to express whether you wish to receive life sustaining measures, such as artificial nutrition and hydration, in the event you are unable to express your preferences. A living will is used in the event you have a terminal illness or are in a persistent vegetative state. A living will provides you with the opportunity to consider your options while you are still competent. The need for and administration of life sustaining measures is a very emotional and sensitive issue. This document provides guidance to your medical providers and your loved ones as to your wishes, and provides your family with the comfort of knowing your medical preferences during this difficult time.

HIPAA Authorization

A HIPAA authorization is a legal document that grants specifically identified persons access to your medical records. Without this authority, medical institutions are limited in the information they are permitted to provide to individuals.

Appointment of Guardian for Minors

While guardians are typically appointed in your last will and testament, that document becomes effective only upon your death and nominates a guardian only in the event of your death. An appointment of guardian document, separate from your will, can be used to appoint a guardian for your minor children in the event you are alive, but unable to care for your children, and in the event of your death.