An estate plan is the collection of documents that spell out the care you want in the event you become incapacitated, share your wishes for medical treatment in emergency situations, and specify how your property should be disbursed when you die. In addition to an estate planning lawyer, you should consult a financial advisor, insurance agent, and/or CPA to develop an estate plan.
When most clients think of “estate planning,” they think of the legal documents used by only wealthy individuals for financial issues after death. However, every Texan should consider some sort of estate planning, not just the wealthy. That is, every Texan should consider hiring an estate planning attorney to provide a Last Will and Testament, power of attorney, and medical planning documents.
Frankly, given the current generous federal estate tax exemptions, the financial planning mechanisms are moot since the vast majority of Americans won’t face federal estate taxes. As such, nowadays, the most important parts of estate plans involve non-financial documents.
No person is guaranteed a tomorrow, so it makes sense to benefit from the peace of mind that an estate plan provides. At base, the estate plan is a roadmap for how a client wants to be treated in the event that the client can’t communicate his or her desires. The estate plan lists whom the client trusts to care for him/her when the client needs help.
Most importantly, the estate plan gives peace of mind to the client and to the client’s loved ones. Beyond the financial considerations of your estate plan, here are several of the most common non-financial documents in the typical Texas estate plan:
Read More About Common Texas Planning Documents
In addition to an estate planning lawyer, you should consult a financial advisor, insurance agent, and/or CPA to develop an estate plan. When most clients think of “estate planning,” they think of the legal mechanisms involved with financial planning for end of life and for after death. Your Last Will and Testament and/or Trust will dispose of most property when you die. Certain non-Probate assets, such as life insurance policies, some retirement benefits, and some bank accounts will automatically outside of the probate process altogether. However, these financial planning mechanisms are just one aspect of estate planning.
Basic Estate Planning Components
Declaration of Guardian
A “declaration of guardian in advance of need” is an estate planning document that allows the client to pre-select a guardian while the client is healthy. A guardian makes all the important decisions on behalf of the ward after the ward has become incapacitated. Without this document, if/when the client becomes legally incapacitated, the probate court will decide who should be the client’s guardian. Most clients want the ability to pre-select a guardian because the choice of guardian is so monumental; a guardian has complete control over all the important personal and financial decisions that affect the ward.
Powers of Attorney
A power of attorney is a powerful document that grants a third party to make decisions on the client’s behalf. Many estate plans actually contain two separate powers of attorney, a medical power of attorney and a general power of attorney. The person chosen to be a medical power of attorney for the client has the ability to make certain medical decisions for the client. The general power of attorney has broader powers, including the ability to make banking transactions, file tax returns, buy and sell stock, sell property, and so forth. Both the medical power of attorney and general power of attorney can be made “durable,” which means that the document will take effect when the client is mentally incompetent.
A living will, also known as an “advance health care directive”, “advance physician’s directive”, or “advance directive”, is a document the client gives to his medical care provider that indicates what life sustaining treatment the client wants in the future event that the client faces terminal illness and is incompetent to make healthcare decisions.
Other Non-Financial Estate Planning Tools
HIPAA Authorization: The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) mandates that health care providers keep private patients’ medical records. However, there are times when people outside of the hospital need to have access to the client’s medical records. The client can allow certain individuals to have access to medical records by filing a HIPAA Authorization with the hospital.
Organ Donor Form: Many clients wish to donate organs but want a say in which organs can be donated and a say in who will receive the organs. If the client wants to make such elections, the client should complete the organ donor form as a part of the estate plan and keep the form in a safe place with the other important estate planning documents.
You can get a Texas Will along with the most important non-financial planning documents in one flat-rate package. Read more about Shutt Law Firm’s unique Wills PLUS Planning Package.
Financial Tools for Estate Planning
A Last Will and Testament and/or Trust will disposes of most property upon death. Certain non-Probate assets, such as life insurance policies, some retirement benefits, and some bank accounts will automatically outside of the probate process altogether. However, these financial planning mechanisms are just one aspect of estate planning.
Wealthy clients should consider hiring an attorney to provide financial estate planning tools. There is no one-size-fits-all trust or other estate planning document. The attorney can advise as to the best type of trust given each client’s goals.
There are an infinite number of variations of trust. Some trusts spring into action during the client’s lifetime (“revocable trusts”), while others spring into action upon death (generally “testamentary trusts”). Some trusts are used to avoid probate, some are used for estate tax or inheritance tax planning, some are used to provide for younger beneficiaries, while others are used to provide for charitable purposes.
Again, there are a myriad of variations on the living trust and on the testamentary trust. Contact an estate planning lawyer for a consultation to discuss your goals and your estate planning options.