Estate Planning Documents and Actions for the New Year

After the rush of the holidays it’s often a good time to evaluate the more practical aspects of life and make a plan for the future. When people think of estate planning, it is often viewed as inevitable. Like taxes, estate planning is seen as an activity that people undertake because they have no choice.

In actual fact, estate planning can be a way of maximizing your options and planning for a better future. Instead of looking at the major estate planning documents in terms of boxes to tick, here are 5 ways of viewing each document as a way of mapping out a better future.

1. Will

While the Will gets all the press, it is not the only powerful estate planning tool in the box. The will dictates who will get your property when you die and who will pay your bills, file your tax returns, and who has the power to distribute your property (your executor). These days though, the will is a narrow document that deals only with property in your own name. Many assets pass outside probate, such as joint accounts, retirement plans, life insurance policies and property in trust. The will is excellent for passing on tangible property: family heirlooms, the kinds of things that can’t be divided (like money) and may be fought over. It’s a great way of making sure you bequeath your property as intended and limit the potential for squabbling. It can also be used to appoint guardians for minor children.

2. Durable Power of Attorney

Durable power of attorney appoints one or more people to handle finances and legal matters in the event of incapacity. Doing this in advance prevents delays, squabbling and legal fees in the event that family members have to resort to going to court to be appointed conservator. There are many ways to tailor durable power of attorney to your needs – whether you think it’s best to have multiple people handle your affairs, when power of attorney takes effect (how is incapacity defined), and whether to grant trust powers.

3. Health Care Proxy

A health care proxy is like a durable power of attorney, but an agent is appointed instead to make health care rather than financial or legal decisions. In this case a doctor has to determine when you are incapacitated to the point you can no longer make decisions for yourself. Only one individual can be your health care proxy, so it is very important to educate the person about your health care wishes, your health, and how to communicate with other family members who could give information about your health. It is advisable to name more than one alternates to the principal agent. A medical directive is often needed, and there are is also info out there to help with decisions in the many situations that could occur.

4. HIPAA Release

A HIPAA release is needed in situations when medical providers need to communicate with people, ie family members, about a patient. Without the release the HIPAA law bars medical practitioners from releasing medical information. The health care proxy may not always be available in the event of a medical emergency, and what’s more the health care proxy doesn’t get activated until incapacity is declared. To make sure that vital discussions can be had about a patient with family members and anyone else with relevant information, a HIPAA release should be signed and available.

5. Revocable Trust

A revocable trust is a very flexible tool that can be used to avoid probate, but is also a good way to keep seniors safe and to predefine the passing of your legacy. A revocable trust is sometimes called a “living trust”, in which a person acts as trustee and beneficiary to a trust, often involving family members as co-trustees so the trust can pass smoothly to them when they die. Older adults can involve their children in the trust by naming them as co-trustees or as successor trustees. Amongst other things this means that children can be more active participants in family financial affairs. If there is a problem where a relative with dementia is being exploited they can view the trust’s accounts. Meanwhile the parent doesn’t give up rights or autonomy. Trusts are the “advanced settings” of estate planning tools, which give the power to distribute funds over time or in ways that would be more fitting to the long-term security of beneficiaries.

For more information and help with your Estate Plan please contact Wellesley based Estate Planning Attorney Sheryl Dennis today at 781.489.6776