An estate plan consists of a several documents. Those documents are durable powers of attorney, an authorization to obtain protected health information and a will or trust.
A durable power of attorney for financial matters names a trusted person to act as your agent to handle your financial affairs under certain circumstances. For example, if you become disabled or incapacitated and have a valid durable power of attorney for financial matters, then your agent has the power to attend to your financial affairs for you. Your agent can file your taxes, sell property, purchase property, write checks, make bank deposits, and take care of lots of other financial matters for you.
A durable power of attorney for health care names a trusted person to act as your patient advocate. A patient advocate makes medical decisions for you only if you are unable to make your own medical decisions. Medical decisions that may need to be made include withdrawing medical treatment, choosing among treatment options, making an organ donation, and resolving disagreements among family members over treatment options.
A companion to a durable power of attorney for health care is a document that authorizes a trusted person to received protected health information about you and about your medical care from your doctor, hospital, and other medical care providers. The trusted person named in this document is called a HIPAA Personal Representative.
Another integral part of your estate plan is your will or trust, which governs what happens to your minor children, money, retirement benefits, real estate, and other property after your death.
Deciding whether you need a will or a trust or both requires figuring out the size of your estate. Make a list of everything you own. Don't forget to include your insurance policies, your retirement benefits, your 401k plan, your house, and your investments. Add up how much each item is worth. The total is the value of your estate. If your estate is over $1,000,000, then you have a large estate and need specialized planning. If your estate is less than $1,000,000, then your estate is of a modest size.
If your estate is large, then you may need a will and a trust. A trust is created and funded during your lifetime. A "pour over will" catches any of your property that was not transferred to your trust during your lifetime and gives that property to your trust. After your death and assuming that your trust was fully funded, your estate is administered under the terms of your trust.
If your estate is a modest one and your have minor children, then your will may include a testamentary trust. This type of trust is funded upon your death and is designed to provide for your children until they reach adulthood.
If your estate is a modest one and your children are grown, then you may only need a will.
Whether your estate is large or modest, you should consult with an estate planning attorney so that your wishes can be followed after your death.
Like any plan, an estate plan needs to be periodically reviewed and modified to keep pace with the changes that occur in your life over the years. It's a good idea to take a look at your estate planning documents every three to five years to see if you need to make any changes.
Even if your life doesn't change, the laws do change. It's a good idea to check with your estate planning attorney every three to five years to see if there have been any changes to the laws that may affect your estate plan. If you happen to hear about a new law that you think may affect your estate plan, it's not a bad idea to contact your estate planning attorney to find out if you need to make any changes to your estate plan.
