There are numerous documents used when putting together an estate plan. Each plan is different and focused on the individual client’s needs so one client may have documents in his or her estate plan that are not necessary to address another client’s estate planning objectives. However, certain documents are common to most estate plans. It is critical that these documents be drafted and reviewed together to ensure consistency among them so that the client’s wishes are accomplished in the planning process.
Below is a list of these common documents with a brief description of their purpose.
Last Will and Testament
The Last Will and Testament is the most well known document and a key part of every estate plan. Even those planning through the use of trusts such as a Revocable Living Trust need a Last Will and Testament as a just in case catch all to dispose of any property not titled in the trust. The Last Will and Testament identifies the client’s family and children, sets forth the client’s wishes with regard to the disposition of his or her property, and provides instructions with regard to the creation of any testamentary trusts.
Trusts
Trusts are increasingly used in the estate planning process for a number of reasons. Many people think trusts are only for the wealthy, but they are not. There are different types of trusts designed to achieve different estate planning objectives.
For example, some estate plans rely on a Revocable Living Trust as the primary estate planning instrument in an effort to avoid probate entirely. Other trusts are designed to protect assets for minor children until they are mature enough and responsible enough to manage property on their own. Special Needs Trusts are used to help make sure that a minor child or disabled adult who receives disability benefits is not disqualified from receiving those benefits by the sudden inheritance of significant assets.
Still other trusts can be setup to protect property from creditors and third parties who could have claims against the assets of a client’s beneficiary.
Durable Power of Attorney
The statutory durable power of attorney is an instrument used to allow someone else to manage the client’s property and make decisions regarding the use and disposition of that property. The durable power of attorney is only effective so long as the client remains alive, including during any period of time in which the client is incapacitated.
The durable power of attorney is a very powerful tool and care should be taken when drafting to ensure that the client’s agent is trustworthy and any powers of that agent are limited as appropriate.
Medical Power of Attorney
The Medical Power of Attorney allows a client to designate an agent to make decisions regarding the client’s medical care in the event that the client becomes unable to make those decisions his or her self. This is an important document because it authorizes the agent to make decisions regarding the client’s medical care in accordance with the agent’s knowledge of the client’s wishes, religious beliefs, or in accordance with the agent’s judgment of what is in the client’s best interests.
In addition, clients with minor children will want to execute a Medical Power of Attorney on behalf of their children to designate an agent to make medical decisions regarding the care of their children in the event the client becomes unable to make those decisions. A need for this designation may arise in the case of children visiting relatives for some period of time or a common accident involving the entire family that leaves the client and other parent incapacitated.
HIPPA Releases
Many clients want to make sure that family members, particularly spouses and children, can receive information about their medical status in the event the client becomes disabled or incapacitated. Doctors, hospitals, and other medical professionals have become increasingly diligent in complying with their HIPAA obligations which means, absent written authorization, the client’s family members would not be entitled to medical information about the client.
In addition, clients with minor children should consider executing a HIPAA Release on behalf of those children to ensure that appropriate individuals can access the children’s medical records.
Declaration of Guardian
Texas law authorizes individuals to designate a guardian before the need arises. There are two types of guardians in Texas: (1) guardian of the estate – who manages the ward’s property; and (2) guardian of the person – who manage’s the ward’s person, including his or her residence, clothing, food, and medical care.
Texas law allows a client to designate whom he or she would prefer to serve as both guardian of the client’s person and estate. The client may designate alternative guardians, and perhaps more importantly, the client may designate whom he or she DOES NOT want to serve as the client’s guardian.
Here is an example of why this is important. There is a presumption in favor of certain persons serving as guardian – such as a spouse. However, it is increasingly common for people to separate these days in contemplation of divorce yet never actually get divorced. In that case, it would be awkward for the client’s separated spouse to be appointed to make decisions regarding the client’s person and property.
Designation of Guardian for Minor Children
In addition to declaring a preferred guardian for the client, a client with minor children will want to designate a guardian of the person and guardian of the estate for their minor children. Again, Texas allows the client the opportunity to designate a guardian, alternative guardians, as well as those individual the client DOES NOT want to serve as guardian of the client’s children.
Directive to Physicians
The Directive to Physicians and Family or Surrogates (it’s legal name) is more commonly known as an advanced directive. It allows the client to communicate his or her wishes regarding end of life treatment to a physician to ensure that the client’s wishes are honored in the event that the client cannot communicate them because of their health.
The advanced directive allows the client to choose whether or not the client wishes to remain on life support in the event his or her condition is considered terminal. In addition, the client can specifically identify treatments he or she does not want the client’s physician to undertake in providing care.
Appointment of Agent to Control Disposition of Remains
This document allows the client to designate an agent to take possession of his or her remains and make decisions with regard to the disposition of those remains. There is a statutory presumption listing in order of priority the individuals allowed to make these decisions by law, but this written declaration can override those presumptions.
In addition, the appointment may include instructions to the agent regarding such matters as the client’s wishes for his or her remains as well as inscriptions or special wishes for memorial services. One important consideration – by accepting this appointment, the agent becomes liable for the costs involved in implementing the client’s wishes so the client should make appropriate financial arrangements.
This is just an overview of what documents are common estate planning tools and what each of those documents accomplish. Follow this link to learn more about why you need these key estate planning documents.
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