What are the Main Components of a Successful Estate Plan?
A solid estate plan will include several documents. The foundational document will be either a will or a living trust. You will need to choose one of these as the cornerstone of your plan. The decision of “will versus trust” depends on your planning goals. A will is only effective upon your death; a living trust is effective immediately when you sign it.
If you decide to create a living trust based estate plan, the trust document will control the disposition of the assets that it owns or receives upon your death. In that case, you will also have a will, called a “pour over will.” Upon your death, the will “pours over” any assets you own in your own name, that don’t already have a named beneficiary, to your trust.
If you create a will based estate plan, the will controls the disposition of any assets you own in your own name, that don’t already have a named beneficiary.
Your plan should include powers of attorney that name people to take care of your finances and your medical needs if you are unable to take care of yourself.
Every estate plan should also have a HIPAA (Health Insurance Portability and Accountability Act) authorization. This document details the people you want to have access to your medical information. If they’re on the list, they get the information. If they’re not on the list, they don’t.
Next, is an advanced medical directive, sometimes called a living will. This document sets forth your wishes of whether you want to be kept alive by artificial means if you’re in a persistent vegetative state. The powers of attorney and living will must be properly coordinated to ensure your wishes are met. You don’t want someone pulling the plug before you direct or keeping you on life support if you don’t want. These documents should also set forth whether and under what conditions you want to be an organ donor.
There should also be a personal property memorandum that allows you give specific items of personal property to specific people. This is a nice way for a mom to leave her wedding ring to her daughter or for a dad to leave his tools to his sons.
Other components that may be included are certificate of trust, letters of instruction to agents and family members regarding funeral, burial or cremation, personal letters and property agreements.
What is a Power Of Attorney?
A power of attorney is a document where you give someone the power to make decisions for you in a certain situation. Most estate plans include a financial or personal power of attorney, sometimes called a general, durable power of attorney and a medical or health care power of attorney. Other powers of attorney may be appropriate depending on your planning goals.
A power of attorney can become legally effective the day you sign it or you can have it become legally effective only in the event that you’re deemed incapacitated. The one that’s effective immediately upon signing is called a “standing” power. The other is called a “springing” power because it “springs” into legal effectiveness as soon as you are deemed to be incapacitated by the signing of a certificate of disability.
For more information on Components of a Successful Estate Plan, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (719) 444-0300 today.