Types of Estate Planning Documents

There are many different documents that will make up your total estate plan.  Some plans are simple and some can be very complicated.  Every State can have slight variations in names and applications of these documents.  The below list of documents is intended to give you a broad understanding of what each document accomplishes in your plan. Make sure you discuss with your attorney the specific differences and applications of each document in your State.

Health Care Proxy 

Life if unpredictable. Unfortunately accidents and unexpected health complications happen everyday. Make sure your loved ones are able to to take care of you in the event you cannot take care of yourself.  The Health Care Proxy does just that.  It informs your physician who can make decisions for you, in the event you cannot make decisions for yourself.  And it informs your physician and your Health Care Agent, what life saving measures you may, or may not, wish to take place in emergencies.

Living Wills/Advanced Directives

Different States refer to these documents by different names.  In essence, these documents cover very specific and detailed medical conditions and how you want to be treated if you suffer from those medical conditions.  

Durable Power of Attorney 

If you are unexpectedly unable to take care of yourself while you are still alive, who will take care of your finances? How will your bills get paid? It's important to give someone you trust the authority to take care of those things for you.  The most common person that is named in this document is your spouse.  However, who will be in charge in the event your spouse has passed away, or is unable to help.  You will want to give some serious thought to who you trust in your life and is competent to make financial decisions.  It could be an adult child, or a sibling, or a trust friend or colleague.  Only you know who can be trusted in your inner circle.  Make sure you name this person in your Durable Power of Attorney.

Last Will and Testament 

This document directs the probate court how to distribute your assets after you pass away.  Thus this document 'speaks' after death.  It will appoint someone to be in charge of your estate, known as a Personal Representative or Executor.  The Will should name the person(s) or entity you want to receive a portion of your assets and in what capacity.  Do you want to require that a child reach the age of 21 or 25 to inherit from you? Do you want to leave any monies to a charity?   Do you want your grandchildren to inherit from you if your child predeceases you? Or perhaps you want your assets to 'pour' into a Trust that you have created.   Creating a Will does not have to be complicated, but you should give it some thought and make sure that it makes sense to you and your circumstances.

Revocable and Irrevocable Trust

A trust is a legal entity separate from the individual.  As a comparison, think of it like a corporation that conducts business and is operated by officers and directors.  With a trust, it conducts the business of managing your assets and is operated by the trustee (typically, you are the initial trustee).  There are many variations of trusts.  Some are revocable, wherein you can change the terms over time, and some are not.  Some trusts are used to avoid the costs of probate, some are used to provide for special needs individuals, and others are used to avoid tax consequences.  The variety of uses goes on and on.  If properly drafted, they help you achieve all of your personal and financial goals.

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