When you plan your estate, you should cover all your bases, and this will require the execution of multiple estate planning documents. The optimal combination will depend on the circumstances, but there are five core components that should be part of every estate plan.
Asset Transfer Vehicle
Monetary asset transfers will come to mind first when you think about the estate planning process. Your estate plan will include a simple will or some type of trust to facilitate distributions to your heirs.
A lot of people think that a will is the only logical choice unless you are a multimillionaire, but this is really not the case. The revocable living trust is the ideal alternative for a number of reasons.
Will vs. Living Trust
First, the probate process is avoided when you state your wishes in a living trust. A will would be admitted to probate, which is a lengthy legal process. No inheritances are distributed while the estate is being probated, so the heirs play a waiting game.
In addition to the time consumption, there are a couple other negatives. Expenses that accumulate during probate shave down the value of the estate, and anyone can access probate records to pry into the details.
There are other types of trusts that can satisfy targeted objectives. For example, a supplemental needs trust can be used to provide an inheritance to a loved one with a disability without impacting Medi-Cal eligibility.
You can use an incentive trust to guide a loved one toward certain actions or away from self-destructive behavior. These are a few of the trusts that can be used, but there are others. You should explore your options before you make any final decisions.
Living Will
Would you want to be kept alive through the use of life-support measures if there was little-to-no hope of recovery?
You can answer this question in a legally binding manner in a living will. You can address each different life-support technique one by one if you choose to do so, and the document can include your comfort care medication and organ and tissue donation choices.
Durable Power of Attorney for Healthcare
Medical situations can arise that are not related to the use of life-support techniques. You can empower a representative to make decisions on your behalf in a durable power of attorney for healthcare.
Aside from the practical purpose, when you have a durable power of attorney, everyone in the family will know that decisions are being made by the person you personally selected. This can prevent potential disagreements and hard feelings.
Financial Decision-Maker
You should also have a durable financial power of attorney. The agent that you choose will be able to manage your financial affairs in the event of your incapacity. If you have a living trust, you can name a disability trustee when you establish the trust.
Health Insurance Portability and Accountability Act (HIPAA) Release
The Health Insurance Portability and Accountability Act was enacted in 1996, and it was put in place to protect patient privacy. One of the HIPAA provisions prevents doctors from releasing medical information to anyone other than the patient.
To give your health care agent the ability to communicate with doctors, you should include a HIPAA release in your incapacity plan.
Schedule a Consultation!
These are the basics, but as we have touched upon, there are different ways to facilitate asset transfers. We can gain an understanding of your situation and explain your options so you can make informed decisions.
When you decide to move forward, we can create a custom-crafted plan that is ideal for you and your family.
You can set the wheels in motion right now if you call our Petaluma, CA estate planning office at 707-769-9975, and you can fill out our contact form if you would like to send us a message.
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