What comes to mind when you hear the term “estate plan”? You may think of an actual estate - a huge swath of land with multiple structures and a whole team of employees to take care of it. Most people don’t own this type of property. I definitely don’t! But estate plans truly are for everyone, mansions or not.
The reality is that an “estate plan” is the collection of documents that help you plan for your legacy and to take care of your children and finances in the event of your death or incapacity. Normally, an estate plan includes a last will and testament, an advanced health care directive (sometimes called a “living will”), HIPAA authorization(s), a power of attorney to handle financial matters, and often a trust. A good way to think about an estate plan is that it is the overarching term for all these documents that work together to protect your family.
A will is what many people think they need in order to provide for their family should something happen to them. However, a will is only effective at death - meaning anything you put in the will won’t happen unless you actually pass away. This is a main reason why the other documents are a part of estate plans - as they allow for more control over your assets during your life, death and if you become incapacitated.
An advanced health care directive tells the world what medical decisions you would like made on your behalf if you can’t make them (or are “incapacitated”). For example some of the choices you can elect are whether you do not want to be resuscitated, you do not want to be on life-support, or if you want pain medication to keep you comfortable. This document also designates someone to make these decisions for you, according to your wishes.
A HIPAA authorization is also often part of an estate plan. This document allows others to receive medical information about you - but not to make any decisions for you. Some doctors and hospitals have their own specific HIPAA forms for their facility, so it is a good idea to see if your providers have a preferred form if you are interested in this.
A power of attorney gives someone the ability to make decisions and sign important documents as if they were you. This is very important for financial matters. If you become incapaictated and in the hospital, this document will allow someone to help keep the bills paid at your house, for example.
A trust is an agreement that dictates rules that you want to be followed for property held in trust for your beneficiaries. A revocable trust is one that can be updated or changed by the trustmaker. Assets (such as real estate) can be put in a trust, and the trustee - the person in charge of making decisions for the trust - has to follow the instructions in the trust. For example, a trust could contain the family home, with instructions that after the death of the spouses, it is to be sold and the proceeds will be split among the two children.
Though the term “estate plan” might seem like it’s something that only ultra-wealthy people need to worry about, nearly every family and person could benefit from setting up a plan.
Please note that this blog post is for informational purposes only and is not legal advice. By reading this information and accessing this website, no legal relationship or representation has been created between the reader and the Law Office of Katie M. Shank. If you are a California resident interested in representation, please contact the Law Office of Katie M. Shank for more information. If you are not a California resident, feel free to ask us for a referral to an attorney who practices in your area.
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