Understanding Estate Planning
The purpose of estate planning is to provide for the management of your assets and financial affairs in case of your incapacity while alive, and to provide for the transfer of your assets upon your death. There are a variety of documents and methods that can be used to accomplish your goals and objectives during life and at the time of your death.
Managing Your Assets and Financial Affairs
Documents Every Person Should Have While They Are Alive
- Financial Power of Attorney - a legal document appointing someone you trust to act as your agent regarding personal, financial and business matters. It terminates upon your death.
- Health Care Power of Attorney - a legal document that authorizes another person to make health care decisions for you if you do not have the capacity to make informed health care decisions for yourself.
- Living Will - a binding legal document you can complete now which declares what your wishes are regarding the use of life-sustaining treatment if you should become terminally ill or permanently unconscious.
- HIPAA Release - a legal document you sign authorizing your doctors, hospitals, medical insurance and other medical providers to provide information about your medical condition to the persons you designate on the form.
Documents for Transferring Assets Upon Death
- Last Will and Testament - a legal document that sets forth how you would like your probate property distributed at your death. Probate property is assets that you own in your name alone, without a co-owner or without a beneficiary. The administration of a will is supervised by probate court.
- Trusts - created during life is called living trusts and created as part of a person’s last will and testament are called testamentary trusts. Testamentary trusts are supervised by probate court while living trusts do not require probate court supervision.
- Beneficiary Designations - will supersede or "trump" the terms of a will and trust.
- Joint Accounts - in most cases belong to the surviving owner without the need of going through probate.
- Payable on Death/Transfer on Death - will transfer ownership of the asset to the designated beneficiary upon presentation of a death certificate and will avoid probate.
