Estate Planning is the field of law dedicated to creating and filing legal documents in order to protect assets and avoid family disputes or litigation after the loss of a loved one.
There are a few core legal documents every person should have in an estate plan: a will, durable power of attorney, and a few healthcare related documents. Regardless of the size of one’s estate, every person should have these five key documents in place to ensure that all his or her financial and medical affairs are in order when the inevitable crises of aging occur. A small investment of time spent now setting up a simple estate plan can save thousands of dollars and avoid the family disputes that often occur when decisions have to be made in difficult situations, or worse still, are never made.
The most important document is a Will
A Will is a document that directs how any assets in your estate, whether real estate, personal property or money, is distributed upon your death. Writing a Will allows you to name your own Executor, control distribution of your assets to determine who gets (or doesn’t get) your property, name a Guardian(s) for minor children, set up Trusts for minor children so assets left for their benefit can be maximized and can be held and distributed per your specific intentions. If you die without a Will, the State will make these determinations for you. A Will ensures that these choices will be yours.
The second document is Power of Attorney
The second legal document your simple estate plan should include is called a Durable Power of Attorney. If, through mental and/or physical infirmity, you become what is considered “legally incapable of handling your own affairs,” the Durable Power of Attorney pre-appoints a person of your choice to make decisions on your behalf. If no Durable Power of Attorney is in place and you become legally incapacitated, your family, friends or whoever is closest to you must go to probate court and petition the court to set up a Guardianship or Conservatorship on your behalf. This process is time consuming, emotionally draining and financially expensive. By having a simple Durable Power of Attorney in place, this potential crisis may be completely avoided.
Health Care Proxy documents
The last three documents in a simple estate plan are related to health. A Health Care Proxy legally appoints someone of your choice to make healthcare decisions for you, should you become unable to do so due to physical and/or mental impairment. A Living Will, also known as an Advanced Health Care Directive, leaves instructions for treatment if you are unable to speak for yourself. This allows you to state your wishes, should you be in a vegetative or comatose state, on life support machinery, whether you would want to be kept alive by mechanical means. A HIPPA Release (Health Insurance Privacy & Portability Act of 2003) is a document that ensures that medical providers will give medical records to health care agents upon request. Having a Health Care Proxy, Living Will and HIPPA release in place ensures that any healthcare situation that arises is pre-spoken for.