I’m sharing this post by my WealthCounsel colleague, Scott Makuakane, who practices in the state of Hawaii. People’s situations vary, and I am not suggesting that you need all five of these documents. But almost everyone needs to put plans and documents in place to achieve the goals covered in this post
“Estate planning” is far more than a set of documents. It includes the plan behind the documents and the goals that the documents are intended to advance. That being said, there are certain documents that just about everybody should have in place. Not having these documents will virtually guarantee that your wishes will not be carried out if you are incapacitated or if you die.
- Your Will. If you don’t have a will, the law of the State (or States) where your assets are located and/or where you reside will dictate where your assets go after you are gone, as well as who will be in charge of making sure your bills are paid and your assets are properly distributed. This process will almost always involve the courts. Having a Will does not avoid sending your family to the courthouse, but at least it gives them a set of instructions to follow. If your instructions are clear, the court will help your family carry them out.
- Your Revocable Trust. The single most effective way to bypass the courts is to create and fund (transfer your assets into) a revocable trust. This can avoid a court proceeding if you are incapacitated, and it can avoid your family’s having to go to court to settle your estate after you die. If you have a revocable trust, you will still need a special kind of Will, called a “Pourover Will,” to serve as a safety net to funnel assets into your trust if you don’t put all of them there during your lifetime.
- Durable Power of Attorney. A durable power of attorney can serve a similar function to your Pourover Will. That is, as a safety net to enable your hand-picked helper to put assets into your revocable trust if you are unable to do so yourself. A durable power of attorney can also help your loved ones make sure your estate plan works as it was intended to work.
- Your Advance Health-Care Directive. This document enables you to say who will make health-care decisions for you if you are unable to communicate them yourself. It also enables you to make the ultimate decision about your medical care-when to stop trying to keep you alive by artificial means.
- Your HIPAA Authorization. HIPAA is a federal law that has far-reaching implications. One of them is that if your medical providers do not zealously protect the privacy of your medical information, they can be subjected to substantial penalties. Thus, if you want your doctor to be able to discuss your medical condition with your family and your hand-picked decision-makers, you have to specifically authorize the release of your medical information to your specified recipients. Not even your spouse or your adult child can get information about you from your doctor without your permission, which could be a real problem if those are the people you are relying on to make medical decisions for you.
Since many of these documents would be referred to in life-changing, life-threatening, or life-ending events; you want to have these documents thought through and executed to avoid confusion and decision paralysis during one of these events. I am available to meet to counsel you on these or other documents that keep you confident if facing any of these type of events.