Estate Planning Basics – Core Documents

Published On: February 27, 2024

Written by: Ben Atwater and Matt Malick

Following our Wealth Management essay series, we are now turning to a series on Estate Planning Basics. Today, we begin the series by examining the three essential documents that every estate plan should include – a Will, a Durable Health Care Power of Attorney and Advanced Health Care Directive (Living Will), and a Durable General Power of Attorney for Finances.

Take this opportunity to review your documents. Make sure they are still consistent with your wishes. Just as importantly, make sure you have talked to your family and anyone else (charities, friends, professional advisors) involved in your plan to be sure they understand your intentions, your plans and their responsibilities under the estate plan. Do not let anyone involved be surprised by your plans.

If you do not have documents or you are not satisfied with your documents, please act quickly to meet with an attorney specializing in estate planning to create an up-to-date estate plan. We are happy to recommend an estate planning attorney who best meets your needs, so do not hesitate to reach out to us.

The hardest estate planning decision can be choosing the people to name in various documents. You are putting an enormous amount of trust in the hands of other people to conduct not only your financial wishes, but also your healthcare wishes, and potentially even who will care for your children.

Let us start with your will. In a will you make sure “the right stuff gets to the right people.”  In doing so, you name an executor or executrix (feminine). An executor of an estate is an individual you appoint to administer your estate. Your will governs your estate, and your executor conducts your wishes as you express them in your will.

If you have minor children or children who will require the care of a guardian after you are deceased, you will name the guardian in your will. If you create a trust under your will, you will name the trustee as well. In a future note, we will talk more about trusts. Aside from the responsible parties you name, you will also name the beneficiaries in the will. This is simply who you want to receive your probate assets and in what proportions.

The next document is a Durable Health Care Power of Attorney and Advanced Health Care Directive (Living Will). This document serves two purposes.

First, the Durable Health Care Power of Attorney allows you to appoint a person or persons, called your Healthcare Agent, to make a wide variety of health care decisions if you cannot act for yourself, even if you find yourself temporarily incapacitated and fully expected to recover.

Your Healthcare agent can decide to admit or discharge you from a hospital or nursing home, choose which treatments or medicines you do or do not receive. Your Healthcare Agent makes these decisions if you cannot do so yourself, and must follow your wishes, to the extent they are known, when making these decisions. Providers also give your Healthcare Agent access to your medical records.

Second, the Advanced Health Care Directive (Living Will) portion of the document states your wish to have certain types of care withheld or withdrawn in specific situations, such as if you have a terminal condition or are in a permanent coma, and guides choices for doctors and caregivers if you are terminally ill, seriously injured, in a coma, in the late stages of dementia or near the end of life. This document will help relieve your family of the burden of having to make the hardest health care decisions for you.

Because medical technology can prolong life even with no chance of recovery, the process of dying can be painful, expensive, and emotionally burdensome to both you and your family. Ideally, a living will should address these issues for you and your family in advance of an end-of-life situation.

You should provide copies of your Durable Health Care Power of Attorney and Advanced Health Care Directive (Living Will) to your primary care physician as well as any specialists you extensively use so these doctors have your documents on file.

The last document we will cover today is the durable general power of attorney for finances. In this document, you authorize people to make financial decisions for you if you are unavailable to act or cannot act for yourself. For example, your agent would be able to sign checks, prepare and file tax returns, transact accounts, access safe deposit boxes, transfer assets, and, in some cases, even make gifts and update beneficiary designations.

You can customize this document but be sure to leave enough latitude for an agent to be effective as unexpected events arise. After you name your agent, we would recommend you get the agent on record at your various financial institutions. It is much easier to act in the event of an emergency if you register these agents with your bank, brokerage firm, mortgage lender, etc.

Having an estate plan is vital for your family. Do not delay, if not for yourself, then for your loved ones. We are available to talk through these issues with you. There is a great deal of nuance to an estate plan and people frequently make mistakes. Our series will aim to address these areas, but everyone’s situation is unique, so please do not hesitate to call on us.