Estate Planning Documents Almost Everyone Needs
Pretty much everyone needs a Durable Power of Attorney for Financial Affairs, an Advance Medical Directive, a Simple Will OR a Revocable Trust and Pour-Over Will, and an Ethical Will or Legacy Letter. Below is a brief description of the nature and purpose of each of these documents.
Durable Power of Attorney for Financial Affairs
A Durable Power of Attorney for Financial Affairs appoints another person to act on your behalf. The person you appoint can have all the powers you have with respect to your property (a “general” power) or powers limited in scope, duration, or to specified property (a “limited” power). The power is said to be “durable” because it remains effective even if you become unable to act for yourself, like if you lose mental clarity in old age. The durability of the power is what makes it so valuable in an estate plan: it appoints someone to manage your financial affairs if you’re unable to do so yourself, without a court proceeding to have a guardian appointed.
Advance Medical Directive
An Advance Medical Directive has two parts: a Living Will and a Health Care Power of Attorney. The Living Will declares your wishes about the providing, withholding, or withdrawing life-prolonging treatments in the event you are diagnosed with a terminal condition. The value of a Living Will is in that it makes your wishes known, potentially avoiding the Terry Schiavo situation. The Health Care Power of Attorney appoints another person to make health care decisions for you if you’re incapable of making informed decisions about conditions and treatments yourself. The value of a Health Care Power of Attorney is that it ensures there’s someone you trust to make decisions and carry out your wishes regarding medical treatment, and it can prevent a court proceeding to have a guardian appointed. Estate plans also should include a Simple Will OR a Revocable Trust with a Pour-Over Will:
A Simple Will is a written legal declaration about how your property should be distributed after your death. In addition to disposing of property, a will also names an executor (a person who will do the actual distributing of the property) and guardians for your minor children. A Simple Will can actually be quite complex: for example, it can contain tax planning provisions and establish trusts that come into existence at your death.
For some people, a Revocable Trust will more appropriate than a Simple Will (more on the differences in a later post). Like a Simple Will, a Revocable Trust, sometimes called a Living Trust, serves as a primary declaration of how your property should be distributed. Revocable trusts can be quite complex: for example, they can contain tax planning provisions, establish other trusts that come into existence later, and give powers and benefits to other people while you’re still alive.
Every Revocable Trust is accompanied by a Pour-Over Will. A Pour-Over Will “pours” any property that isn’t in your Revocable Trust at the time of your death into the trust. Like a Simple will, it also names an executor and guardians for minor children.
For the Parents of Minor Children
Parents need a few extra documents in their estate plans to ensure their kids are cared for if the parents are incapacitated or unavailable. A Standby Guardianship Designation will designate a person to take temporary custody of your children if you’re incapacitated or unavailable. A Medical Treatment Authorization and Consent document will allow a person you name to consent to medical treatment for your child.
Ethical Will or Legacy Letter
All of the documents I’ve described so far are legal documents. One Point One Legal’s “Essentials” Plans include a non-legal document as well: an Ethical Will or Legacy Letter. These documents aim to pass on values to younger generations, explain family and cultural history, and express hopes and wishes for loved ones. They can also help diffuse conflicts over assets and increase heirs’ satisfaction with their inheritances.
Alvi Aggarwal breaks down legal complexity. Using her deep understanding of trust, estate, and tax law, Alvi clarifies thorny legal concepts and guides her clients to estate plans that reflect their values and help them reach their goals. Her expertise extends to all aspects of estate and tax planning, from simple wills to provide for a spouse and protect children, to succession planning for small and family-owned businesses, to multi-generational estate plans with charitable and dynasty trusts. Whether you need to plan for your future, your family’s future, or the future of your business, Alvi can help you formulate and implement the right plan. When she isn’t hard at work for her clients, Alvi enjoys running, playing tennis, and cooking without recipes (and going to restaurants when that doesn’t work out). She hails from Merritt Island, Florida.