Many people think of estate planning as death planning. However, estate planning also includes lifetime planning which would be making sure that you are taken care of in the event you became incapacitated and also that your property is taken care of if you are unable to care for it.
The complete definition of Estate Planning is: I want to control my property while alive and well, plan for me and my loved ones if I become incapacitated, and when I’m gone, I want to give what I have to whom I want when I want and the way I want, and if I can, I want to save taxes, fees and costs. The essential estate planning documents are discussed below.
A Durable Power of Attorney is a document by which you appoint an agent, sometimes called an attorney-in fact, to make financial decisions for you if you are not capable of making them on your own. A Durable Power of Attorney may give your agent full, broad, general powers to act on your behalf or limited powers such as to sell a parcel of real estate or transfer property to a trust. Without a Durable Power of Attorney, someone may have to be appointed by the probate court to make financial decisions on your behalf.
A Durable Power of Attorney for Health Care, also called a Designation of Patient Advocate, is a document by which you appoint a health care agent, also called a patient advocate, to make medical decisions for you if you are not capable of making them on your own. Without a Durable Power of Attorney for Health Care, someone may have to be appointed by the probate court to make medical decisions on your behalf. A Durable Power of Attorney for Health Care should include advanced medical directives, also called living will provisions, to explain your medical preferences regarding end-of-life care and the withholding or withdrawing medical treatment. Health Insurance Portability and Accountability Act (HIPAA) Provisions, anatomical gift (organ donation) provisions and mental health treatment provisions should also be included in your Durable Power of Attorney for Health Care.
A Will is a document in which you appoint a personal representative (formerly executor), to follow the instructions in your will to distribute your property after your death. It is generally only applicable to property owned solely by you. A will must be probated if you leave any property in your own individual name. A will does not usually apply to joint property, property held in trust or property for which you have designated a beneficiary other than your estate.
A Revocable Living Trust is a document with instructions to manage and distribute your property both during your lifetime and after your death. You can be the trustee during your lifetime. Your assets should be titled in the name of your trust during your lifetime. You may include specific provisions for your beneficiaries in your trust such as catastrophic illness directions, creditor protection, remarriage protection, divorce protection, values promotion and personal instructions. A trust is generally not supervised by the probate court unless a party requests the supervision.
By: Matthew M. Wallace, CPA JD
Published edited July 26, 2009 in The Times Herald newspaper, Port Huron, Michigan as: Know estate planning papers