What’s in a Basic Estate Plan?

Clients routinely tell their attorneys, “I need a will.” While a few decades ago a simple will may have been appropriate, today’s complicated legal environment requires attorneys to parse through their client’s statement, and determine their true goals. When I hear that familiar sentence, I interpret the meaning as, “I need help.” More specifically, “I need help handling my affairs in the event that I am unable to do so.”

Most often, the solution to the client’s concern is a basic estate plan. A will is certainly an integral part of that plan, but an estate plan can be so much more. A proper, basic estate plan will not only plan for a client’s death, but will also plan for their incapacity, avoid the time and expense of Probate Court as much as possible, and provide for their family in the precise manner that they choose.

Saving the real nitty gritty for later posts, allow me to answer this topic’s question: What’s in a basic estate plan?

1) Will

A will is the most fundamental of estate planning documents. It does two things.  First, it says who gets what. Second, it says who’s in charge. The problem with wills is that that’s about all that they do. Furthermore, a will must be presented to the Probate Court for approval, and the court then maintains oversight of the estate administration process, which results in a great deal of time, effort, and legal expense. For these reasons, most attorneys (including myself) recommend that clients place their assets into a revocable trust during their lifetimes. If the trust is properly funded, then the will just serves as a backup plan for anything not in trust.

2) Revocable Trust

Assets placed in a revocable trust are fully accessible to the client during their lifetime. Upon their death, the trust functions much like a will, except that it does not require the approval of the Probate Court, and its provisions are much more flexible. For example, a simple will might say that everything goes my children. A revocable trust could say that everything goes for the benefit of my children, until they reach age thirty, whereupon they receive the balance outright. With a simple will, children would have full access to their inheritance at age 18… With a trust, it could be used for their benefit at any age, but protected from them until they have the maturity to use it wisely. Finally, an alternate trustee can manage a trust if the client becomes incapacitated during their lifetime.

3) Durable Power of Attorney

A durable power of attorney allows a client to nominate someone to make financial decisions no their behalf, while they are unable to do so themselves. Without this agency relationship in place, an incapacitated client will need a court appointed conservator to manage their finances. The process of appointing a conservator requires prolonged court proceedings and medical testimony, and can be very costly.

4) Health Care Proxy

Similar to a power of attorney, a health care proxy allows a client to nominate someone to make medical decisions on their behalf, should they become incapacitated. Without a validly appointed health care agent, the client would need a court appointed guardian, which involves the same rigamarole as appointing a conservator.

5) Living Will and HIPAA Release

A living will is a written declaration of medical wishes. In our beautiful Commonwealth of Massachusetts, a living will has no standing, because we use health care proxies instead. However, a living will is still useful as a source of guidance for the health care agent, and as evidence to prove that the agent made the correct decision.  A HIPAA release simply allows the health care agent to view a client’s medical records, which are otherwise protected by federal privacy regulations.

As you can see, there is so much more to life than death. Resultantly, there is so much more to estate planning than just a will. Stay tuned for further exploration of these topics… Or better yet, shoot me a call or email if there’s anything you would like me to discuss further.

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