There are multiple legal strategies and tools that you can use to implement your wishes regarding you, your family, and your assets. At the core of any of any estate plan are several essential documents, which provide the foundation for every estate plan.
What foundational documents do you need?
What are the foundational estate planning documents?
Every person needs:
- Last Will and Testament appointing a person to manage your affairs after your death, including gathering all of your assets, paying your final bills, and finally distributing your remaining assets to your heirs;
- Healthcare Directive detailing your wishes regarding medical treatment if you are unable to communicate your wishes;
- Healthcare Power of Attorney appointing a person to make healthcare decisions for you if you are unable to make decisions;
- Financial Power of Attorney – similar to a Healthcare Power of Attorney but for financial decisions;
- Medical Information Release allowing named loved ones and friends access to your medical information;
- Revocable Living Trust for the management of your assets while you are alive – but incapacitated – and distribution of your assets after your death without court supervision; and
- Guardian Nominations for Minor Children detailing those people you would – and would not – want to care for your minor children.
Understanding what the foundational documents do for you.
Below is more information about each of these estate planning documents, our estate planning attorneys can prepare these documents for you.
Last Will and Testament. A Last Will and Testament details out how you want your assets are distributed after your death, and also nominates people to be in charge of and oversee the distribution of your assets. Without a Will, your assets would be distributed according to state law to surviving family members based upon their relationship to the deceased person. The state law doesn’t factor in whether the deceased person had a close relationship to the person, just how closely related they were (so a cousin that spent every weekend with a person would be trumped by an estranged brother). A Will is not effective until after a person dies and a probate court declares the Will to be the deceased person’s Last Will and Testament. As the Will isn’t effective until after your death, your Will cannot appoint people to make financial and healthcare decisions for you during your life if you become incapacitated due to illness or disability. A Will can also appoint a guardians for minor children if both parents die, though we recommend doing so in a separate document, which we explain more in the section on guardian appointments.
Healthcare Directive. A Healthcare Directive, also called an Advanced Directive or Living Will, is a document that a person signs now giving specific direction regarding the type and extent of medical treatment a person wants to receive in the future if the person is unable to communicate those directions. We recommend everyone over 18 years old has a Healthcare Directive (a person under 18 years years old can’t sign one). Once a person signs a Healthcare Directive, we recommend that a copy is given to your physician to go in your medical files and a copy is given to each person you appoint as an agent to make healthcare decisions.
Financial Power of Attorney. A Financial Power of Attorney appoints another person to make business and financial decisions of you. The person you appoint is called an “agent” or “attorney-in-fact.” The scope of the agent’s power is specified in the Financial Power of Attorney. In addition, the Financial Power of Attorney specifies whether the agent’s power is effective immediately or only upon a certain event – such as your disability. The agent’s power only lasts while the person who made the Financial Power of Attorney is alive. After a person dies, then the person who has authority to act on behalf of the deceased person is appointed by the probate court based upon the deceased person’s Last Will and Testament.
Healthcare Power of Attorney. The Healthcare Power of Attorney is similar to the Financial Power of Attorney, except it appoints an agent to make healthcare decisions rather than financial decisions. The reason these a separate power of attorney is used for healthcare is because a person may want to appoint a different person to serve as the agent for financial decisions and the agent for healthcare decisions.
Medical Information Release. No one has a right to access the medical records of another person – not even a spouse. A Medical Information Release authorizes those people named to both access your medical records and speak with your healthcare providers. Without this specific authorization to release protected health information – which is almost all medical records – then there is a possibility that the agent you appoint in your Healthcare Power of Attorney would not have the basic medical information on your condition to make decisions when you cannot.
Revocable Living Trust. There are literally over a hundred types of trusts – though 95% of those trusts aren’t used by most people. The type of trust used by most people is a Revocable Living Trust. There are three different roles within a trust: (a) the person who creates the trust, who is called the Grantor; (b) the person who is in charge of the trust, who is called the Trustee, and (c) the person who benefits from the trust, who is the Beneficiary. With a Revocable Living Trust, the person or couple creating the trust normally do all three roles – they created the trust, they control the trust, and they benefit from the trust. There are two main reason people create Revocable Living Trusts: (1) to avoid “living probate,” which is when the court appoints another person to manage an incapacitated person’s property, and (2) to avoid the probate process after the person’s death. There are other trusts that can help protect assets from creditors and minimize taxes, which are part of the next level of estate planning.
Guardian Nominations for Minor Children. One of the greatest responsibilities people face is if they become a parent. If parents die before their child becomes an adult, the parents can nominate who will care for their children. Ultimately a court has the final say in who will raise a minor child, though the courts find the nominations by a child’s parents very persuasive. There are three important nominations to make for minor children: (1) who will take care of minor children on a short-term basis (for example, who can pick up the child from daycare or school); (2) who will take care of the minor child on a permanent basis (where the child will live and who will takeover the parental responsibilities if his parents die); and (3) anyone who the parents do not want to care for their child.