Blog

[Prefer to listen? You can find a podcast version of this article here: E166: Basic Estate Documents Everyone Should Have]

Estate planning is all about making sure your assets get passed on the way you want after you're gone. It also lets you make decisions about your own health and money if you can't make them yourself.

Making a solid estate plan helps protect your loved ones and makes sure your wishes are followed. It can also help avoid fights among family members and make things easier for them when you're gone.

Estate planning doesn't have to be complicated or expensive. The exact steps you take will depend on your situation and goals, but there are some basics that can make it easier.

A complete estate plan includes a few key documents that work together to make sure your money and property gets passed on the way you want and your medical and financial affairs are taken care of if you can't take care of them yourself.

The core documents typically included in an estate plan are:

• A last will & testament (and possibly a revocable living trust)
• A living will
• A durable power of attorney
• A healthcare power of attorney
• HIPAA authorization

Individuals with more complex situations or with high net worth will often make use of additional instruments such as different types of trusts. We will not go into that level of detail. This guide is meant to outline the basic set of estate documents that most people should have in place as a foundation.

Last Will & Testament

A last will and testament is a legal document that outlines how you want your assets and property to be distributed after your death. It also allows you to appoint a guardian for any minor children. A will is an important part of a comprehensive estate plan, as it ensures that your wishes are carried out and that your loved ones are provided for after your death.

In a will, you can specify who you want to inherit your assets, such as your home, car, personal belongings, and bank accounts. You can also specify who you want to serve as the executor of your estate – the person who will be responsible for carrying out the terms of your will and overseeing the distribution of your assets.

It is important to note that a will does not take effect until after your death. This means that you can make changes to your will at any time while you are still alive, as long as you have the mental capacity to do so.

It is also important to have your will properly executed, which means that it must be signed and witnessed in accordance with the laws of your state. An experienced estate planning attorney can help you to ensure that your will is properly prepared and executed.

Living Will

A living will, also known as an advanced healthcare directive or healthcare proxy, is a legal document that outlines your wishes for medical treatment if you are unable to make decisions for yourself. This can include decisions about life-sustaining treatment, pain management, and other medical care.

A living will typically goes into effect when your doctor determines that you are unable to make decisions for yourself, either because you are unconscious, in a coma, or have a serious and incapacitating illness. At this point, your living will serves as a guide for your doctors and loved ones, who can make decisions about your medical care based on your wishes as expressed in the living will.

In a living will, you can specify the types of medical treatment you do or do not want to receive, such as life-sustaining treatment, artificial nutrition and hydration, and pain management. You can also appoint a healthcare proxy (more on that later), who will be responsible for making decisions about your medical care if you are unable to do so yourself.

It is important to have your living will properly executed, which means that it must be signed and witnessed in accordance with the laws of your state. An experienced estate planning attorney can help you to ensure that your living will is properly prepared and executed.

Having a living will is an important part of a comprehensive estate plan, as it ensures that your wishes for medical treatment are carried out if you are unable to make decisions for yourself. It can also provide peace of mind for your loved ones, who will know that they are making decisions that are in line with your wishes.

Durable Power of Attorney

A durable power of attorney is a legal document that allows you to appoint someone to manage your financial affairs if you are unable to do so yourself. This person, known as an "agent" or "attorney-in-fact," can make decisions about your assets and property, pay your bills, and handle other financial matters on your behalf.

A power of attorney typically goes into effect when your doctor determines that you are unable to make decisions for yourself, either because you are unconscious, in a coma, or have a serious and incapacitating illness. At this point, your agent will be able to act on your behalf and make decisions about your finances.

Note that there is more than one type of power of attorney. In some cases, a durable power of attorney is used and in other cases, a “springing” power of attorney may be used.

A durable power of attorney is a legal document that allows you to appoint someone to make decisions on your behalf if you become unable to make them yourself. The authority of the person you appoint, known as your "attorney-in-fact" or "agent," becomes effective as soon as you sign the document.

A springing power of attorney, on the other hand, is a document that only becomes effective under certain specified circumstances. These circumstances are usually defined in the document, and may include things like the occurrence of a specific event (such as your becoming incapacitated or unable to make decisions for yourself) or the passage of a certain amount of time.

In other words, a durable power of attorney is immediately effective, whereas a springing power of attorney only takes effect under certain conditions. The main advantage of a springing power of attorney is that it allows you to retain control over your decisions for as long as possible, whereas a durable power of attorney gives your attorney-in-fact immediate authority to act on your behalf.

In a power of attorney, you can specify the types of financial decisions that your agent will be able to make, such as paying your bills, managing your bank accounts, and selling your property. You can also specify any limitations or restrictions on your agent's powers.

It is important to have your power of attorney properly executed, which means that it must be signed and witnessed in accordance with the laws of your state. An experienced estate planning attorney can help you to ensure that your power of attorney is properly prepared and executed.

Having a power of attorney is an important part of a comprehensive estate plan, as it ensures that your financial affairs are managed if you are unable to do so yourself. It can also provide peace of mind for your loved ones, who will know that they are making decisions that are in your best interests.

Healthcare Power of Attorney

A healthcare power of attorney, also known as a healthcare proxy or medical power of attorney, is a legal document that allows you to appoint someone to make decisions about your medical care if you are unable to do so yourself. This person, known as your healthcare agent or proxy, will be responsible for making decisions about your medical treatment based on your wishes and best interests.

A healthcare power of attorney typically goes into effect when your doctor determines that you are unable to make decisions for yourself, either because you are unconscious, in a coma, or have a serious and incapacitating illness. At this point, your healthcare agent will be able to act on your behalf and make decisions about your medical care.

In a healthcare power of attorney, you can specify the types of medical decisions that your agent will be able to make, such as decisions about life-sustaining treatment, pain management, and other medical care. You can also specify any limitations or restrictions on your agent's powers.

It is important to have your healthcare power of attorney properly executed, which means that it must be signed and witnessed in accordance with the laws of your state. An experienced estate planning attorney can help you to ensure that your healthcare power of attorney is properly prepared and executed.

Having a healthcare power of attorney is an important part of a comprehensive estate plan, as it ensures that your medical decisions are carried out if you are unable to make them yourself. It can also provide peace of mind for your loved ones, who will know that they are making decisions that are in line with your wishes.

HIPAA Authorization

A HIPAA authorization document is a legal document that allows you to authorize certain individuals to access your protected health information (PHI). Protected health information is any information about your health, medical condition, or treatment that is collected and maintained by your healthcare providers. Under the Health Insurance Portability and Accountability Act (HIPAA), your healthcare providers are required to keep your PHI confidential, unless you specifically authorize them to share it with certain individuals.

A HIPAA authorization document allows you to specify which individuals you want to have access to your PHI, as well as the specific types of information that you are authorizing them to access. For example, you may want to authorize your healthcare provider to share your medical records with your spouse or another family member, or you may want to authorize a specific healthcare provider to share your PHI with another provider for the purposes of coordinating your care.

It is important to have your HIPAA authorization document properly executed, which means that it must be signed and witnessed in accordance with the laws of your state. An experienced estate planning attorney can help you to ensure that your HIPAA authorization document is properly prepared and executed.

Having a HIPAA authorization document is an important part of a comprehensive estate plan, as it ensures that your loved ones have access to your medical information if you are unable to make decisions for yourself. It can also help to facilitate the coordination of your medical care if you are receiving treatment from multiple providers.

Revocable Living Trust

Some individuals and families opt to include a revocable living trust in their estate plans.

A revocable living trust is a type of trust that allows you to manage your assets and property during your lifetime, and to specify how you want your assets to be distributed after your death. A revocable living trust is called a "living trust" because it is created and funded during your lifetime, as opposed to a testamentary trust, which is created and funded after your death through your will.

A revocable living trust is called a "revocable" trust because you can make changes to the trust or even terminate it at any time while you are still alive, as long as you have the mental capacity to do so. This means that you can change the beneficiaries of the trust, or change the terms of the trust, without having to go through the time and expense of creating a new trust.

In a revocable living trust, you will typically serve as the "grantor" or "settlor" of the trust, which means that you are the person who creates the trust and transfers your assets into it. You will also typically serve as the "trustee" of the trust, which means that you are responsible for managing the assets of the trust and making decisions about how they are distributed.

After your death, the assets of the trust will be distributed according to the terms of the trust, as specified by you in the trust document. This means that you can specify exactly who you want to inherit your assets, and how you want your assets to be distributed, without the need for probate court supervision.

A revocable living trust can be a useful tool for estate planning, as it allows you to manage your assets during your lifetime and to specify how they are to be distributed after your death. It can also help to avoid probate, which can be a time-consuming and costly process. However, it is important to consult with an experienced estate planning attorney to ensure that your revocable living trust is properly prepared and executed.

A revocable living trust can be a useful tool for estate planning, as it allows you to manage your assets during your lifetime and to specify how they are to be distributed after your death. It can also help to avoid probate, which can be a time-consuming and costly process. However, there are also some potential disadvantages to consider when deciding whether a revocable living trust is right for you.

Pros:

• Avoid probate: One of the main advantages of a revocable living trust is that it can help to avoid probate. Probate is the legal process through which a court oversees the distribution of a deceased person's assets. This can be a time-consuming and costly process, and it is often a source of stress and conflict among family members. A revocable living trust allows you to specify how you want your assets to be distributed after your death, without the need for probate court supervision.
• Manage assets during your lifetime: Another advantage of a revocable living trust is that it allows you to manage your assets during your lifetime. This can be especially useful if you become incapacitated or unable to manage your own affairs. Because a revocable living trust is created and funded during your lifetime, you can appoint someone to act as your trustee and manage the assets of the trust on your behalf. This can provide peace of mind for you and your loved ones, knowing that your assets are being managed in accordance with your wishes.
• Flexibility: A revocable living trust offers a high degree of flexibility. Because you can make changes to the trust or even terminate it at any time while you are still alive, you can adjust the terms of the trust to reflect any changes in your circumstances or wishes. For example, if you want to change the beneficiaries of the trust, or if you want to add or remove assets from the trust, you can do so without having to create a new trust.

Cons:

• Complexity: One potential disadvantage of a revocable living trust is that it can be a complex legal instrument to create and manage. In order to create a valid and effective revocable living trust, you will need to transfer your assets into the trust, which can be a complex and time-consuming process. You will also need to manage the assets of the trust, which can require a significant amount of time and attention.
• Cost: Another potential disadvantage of a revocable living trust is that it can be expensive to create and maintain. In order to create a revocable living trust, you will need to hire an attorney to draft the trust document and to help you transfer your assets into the trust. You may also need to pay ongoing fees to a professional trustee to manage the assets of the trust. These costs can add up over time, and they may not be feasible for everyone.
• Limited benefits: In some cases, a revocable living trust may not offer many benefits over other estate planning tools. For example, if you have a small estate or if you are comfortable with the probate process, a revocable living trust may not provide many advantages over a simple will. In these cases, it may not be worth the cost and effort to create and maintain a revocable living trust.
• Taxation: trust tax rates top out much sooner than regular income tax rates, and this can result in pre-tax assets like Traditional IRAs and 401(k)s being taxed very heavily in the trust.

Overall, the pros and cons of a revocable living trust will depend on your individual circumstances and goals. It is important to carefully consider these pros and cons of a trust, and to consult with an experienced estate planning attorney who can help you to determine whether a revocable living trust is right for you.

One of the most common “complicated” parts of using a revocable living trust is placing your home into the trust. In order for the trust to serve a purpose, assets need to be placed into the trust (this is called “funding”) the trust.

Placing your home into the trust involves paperwork and a filing process with your county recorder’s office which can be time consuming and inconvenient.

An alternative is to create a Transfer on Death Deed (“TODD”) for your home which transfers the home into the trust upon your death (or the death of both spouses) but this still involves paperwork, notarization, and filing with the county recorder’s office. Only some states recognize Transfer in Death Deeds so you’ll need to verify the options for your specific state.

A revocable living trust can be complicated to set up and fund, but it can make sense to consider if:

• You have minor children and want to have detailed control over how assets are distributed to them upon your death (such as distributing certain amounts at certain ages).
• You want to avoid the time and costs of probate for your surviving family members.
• You want to keep the details of your property transfer private.
• You are highly organized and willing to go through the steps to properly fund the trust.

Even if you have a revocable living trust, you will still have a will, called a “Pour Over Will”, which will “capture” any property not included in your trust and “sweep” it into your trust through the probate process.

Creating Estate Documents

There are several ways to get estate documents created, depending on your needs and preferences. Some of the most common ways to get estate documents created include the following:

Hiring an estate planning attorney: One of the best ways to get estate documents created is to hire an experienced estate planning attorney. An attorney can help you to understand your legal options and to create a comprehensive estate plan that is tailored to your individual needs and goals. An attorney can also provide valuable guidance and advice on complex legal issues, and they can help to ensure that your documents are properly executed and enforceable.

Using online estate planning services: Another option for getting estate documents created is to use an online estate planning service. These services typically provide a range of customizable templates and tools that allow you to create your own estate planning documents. While these services can be a convenient and cost-effective option, it is important to carefully review the terms and conditions, and to make sure that the service is reputable and reliable.

Using do-it-yourself kits: You can also create your own estate documents using do-it-yourself kits or software programs. These kits typically provide pre-printed forms and instructions that you can use to create your own estate planning documents. While these kits can be a relatively inexpensive option, it is important to carefully read and follow the instructions, and to make sure that the documents are properly executed and enforceable.

Overall, there are many different ways to get estate documents created, and the best option for you will depend on your individual needs and circumstances. It is important to carefully consider your options, and to consult with an experienced estate planning attorney if you have any questions or concerns.

Executing Estate Documents

The process of executing estate documents refers to the steps that must be taken in order to make your estate planning documents legally valid and enforceable. In general, the process of executing estate documents involves the following steps once they are created:

• Sign the documents: The next step in executing your estate documents is to sign them. In order for a document to be legally valid, it must be signed by you, the person creating the document, in the presence of at least two witnesses. The witnesses must also sign the document in your presence, and they must be adults who are not named as beneficiaries in the document.
• Have the documents notarized: In some cases, your estate planning documents may also need to be notarized. This means that a notary public must witness your signature and verify your identity. Witnesses may also be required.
• Store the documents safely: After your estate planning documents are signed and notarized, it is important to store them in a safe and secure place. This ensures that they will be readily available when needed, and it protects them from being lost or damaged. It is a good idea to store your original documents in a fireproof safe or safety deposit box, and to provide copies to your attorney and to your loved ones, especially those named in the documents (such as executors, agents, trustees, and guardians).

Overall, the process of executing estate documents is an important step in creating a comprehensive estate plan. By following these steps and consulting with an experienced attorney, you can ensure that your documents are properly prepared and enforceable.

Estate Planning is an Act of Love

Estate planning is an act of love because it involves making decisions and taking steps to protect and provide for the people you care about, both while you are alive and after you pass away.

By creating a comprehensive estate plan, you can ensure that your loved ones are taken care of and that your wishes are carried out. This can provide them with a sense of security and peace of mind, and can also help to avoid potential conflicts among family members.

In this way, estate planning is a way of showing your love and concern for the well-being of your loved ones. It is a way of taking care of them and making sure they are provided for, even after you are gone.