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SIX “MUST HAVE” DOCUMENTS OF YOUR ESTATE PLAN

As discussed in this previous blog post overview, there are six documents that should be part of most everyone’s estate plan:

  1. Estate planning questionnaire
  2. Will
  3. Power of attorney for health care
  4. Power of attorney for financial matters
  5. Disposition of personal property
  6. Disposition of final remains

Last blog post, I explained the basics of a will. 

In this post, let’s discuss the benefits and important aspects of a health care power of attorney.

WHAT IS A HEALTH CARE POWER OF ATTORNEY?

A health care power of attorney (“POA”) is a legal instrument that allows you to select the person (called an “agent”) that you want to make health care decisions for you, if and when you become unable to make such decisions for yourself.

WHAT TYPES OF DECISIONS CAN BE MADE BY A HEALTH CARE POA?

A health care POA can govern any decision related to your health that you want to address. A health care POA may include decisions related to organ donation, hospitalization, treatment in a nursing home, home health care, psychiatric treatment, end-of-life (i.e., the use of life support), and more.

WHEN WOULD I USE A HEALTH CARE POA?

A health care POA is used when you become unable to make health care decisions for yourself. Your agent will be able to make decisions for you based on the information you provided in your health care POA. Equally important, your agent will be able to access your medical records, communicate with your health care providers, and so on.

WHAT HAPPENS IF I DON’T HAVE A HEALTH CARE POA?

If you don’t have a health care POA, and you should become disabled to the point where you are unable to make health care decisions for yourself, your health care provider (say, a hospital) will do everything possible to save your life.

Your family, without guidance from you, will be faced with agonizing decisions. Your family members may not be able to agree on how to handle your medical care, or you might disagree with the decision your family ultimately makes.

If your family can’t agree on a course of action, they would have to go to an Iowa Court and have a conservator/guardian appointed for you. It may, or may not, be someone you would have chosen. Further, the conservator/guardian may make decisions you wouldn’t have made.

This is all very complicated, time consuming, and expensive.  A health care POA simplifies this process by giving you control over how decisions are made for you and allowing you to choose who will carry out your wishes. Best of all, it leaves your family with peace of mind.

IS THERE A “ONE-SIZE-FITS-ALL” POA FOR HEALTH CARE?

No! All Iowans are special and unique, and so are each individual’s issues and concerns. Consequently, this article is presented for informational purposes only, not as legal advice. Please consult your lawyer for personal advice.

DO I NEED OTHER ESTATE PLANNING DOCUMENTS IN ADDITION TO A HEALTH CARE POA?

Yes, definitely! (It’s even essential for college students.) There are six “must-have” estate planning documents that make up a complete, comprehensive estate plan. (Some people may also need to consider a trust.)

Do you have a health care POA currently? And do you have a complete estate plan? Why or why not? I’d be most interested in any thoughts or comments. Email me anytime at gordon@gordonfischerlawfirm.com or call 515-371-6077.

*OK, not everything. But many things, let’s say, an excellent start.

april fool's day balloons

Hopefully, you didn’t get pranked too bad today or misled by a jokester on social media today. But, if you did, happy April Fool’s Day! We all love a good practical joke now and then, but the subject of estate planning is definitely not one to laugh at. If you already have an estate plan in place, that’s fantastic, but don’t let an old or inadequate estate plan make a fool out of your life, property, and legacy.

Review Your Estate Plan

Let this lighthearted April Fool’s day actually serve as a reminder to review your current documents and determine if you need to consider updated language, additional provisions, or a different strategy (like “upgrading” from a basic will to a trust). When revisiting your estate plan consider these common mistakes I see when reviewing folks’ less-than-optimal documents.

Living Trusts Missing Retirement Plan Lingo

Many people have a valid portion of the estate assets investing in retirements plans like IRAs and 401(k)s. The mistake comes when people designate their revocable living trust as the beneficiary of these plans, but the trust hasn’t been written or updated to grant the trustee the power to manage the accounts placed in the trust. Without vesting this power in the successor trustee (presuming the testator was the initial trustee and then passed away), the trustee can lack the ability to properly deal with the plan assets and unfavorable income tax consequences can occur.

Uncertain if your revocable living trust properly contains the requisite retirement plan lingo? Simply check with an experienced estate planning attorney and invest in amending.

Outdated Living Wills

Also known as an “advanced medical directive,” your living will should contain the appropriate Health Insurance Portability and Accountability Act of 1996 (more commonly referred to as HIPAA) language. (HIPAA involves privacy and who can and cannot have access to your medical records.) If your living will was drafted pre-2001 (before Congress passed new rules governing the Act) it likely doesn’t contain the essential references to HIPPA. I’ve even seen some living wills written well after 2001 that didn’t have the proper provision. It may sound silly, but without this “magic” wording, your designated health care representative won’t have access to your medical records. Without this access, they may not be able to fulfill their duty in making the most informed decisions regarding your health care as possible. This mistake can be especially important if you’ve designated someone other than a close relative (such as a spouse or adult child) as your agent.

Underfunded Living Trusts

Another mistake I’ve seen is living revocable trusts that are not fully funded. Undoubtedly, without the guidance of a quality estate planner, the funding process can feel overwhelming. When people procrastinate or run into roadblocks when placing assets into their trust they can get frustrated and fail to complete the process. This is a misstep with negative consequences because without funding the trust, it’s best thought of as an empty container waiting for a testator’s assets to fill it up. Without it, if the person with the underfunded trust passes away, the estate will still need to pass through the sluggish and costly probate process. And, quite frankly, the investment in the trust will have been for little benefit or advantage.

Let your estate planner help you through this process. Also, consider if you have any new major assets that need to be assigned to the trust.

All jokes aside, every Iowan deserves a high quality and functional estate plan that meets their goals. Don’t be a fool and let more time go by before reviewing your plan! Please contact me with any questions; I offer a free one-hour consult.

Gordon Fischer Iowa City At Desk-Estate Plan

Estate planning.

Not exactly material for scintillating conversation. In fact, I’d bet most of us like to avoid this topic because it can be confusing, and requires lots of decision-making. And, well, yes, it forces one to think about one’s own mortality. Estate planning, after all, is a roadmap about what you want to happen after you move on from this life. While it may not be a fun topic, it is indeed a necessary one.

Estate plan: you almost surely need one

Almost everyone needs some kind of estate plan. If you’re young, healthy, unmarried, have no children, and have no significant or unusual assets…perhaps you could talk me into the idea that you don’t entirely need an estate plan. Even in such (rare) cases, I strongly recommend making sure your beneficiary designations are completed and up to date (for example, on your bank/credit union savings accounts and retirement benefit plan). But, if you are married, and/or have kids, and/or have significant or unusual assets, and/or own part or all of a business, you most definitely need an estate plan!

Baby in arms of dad

What IS an estate plan, anyway?

What do we talk about when we talk about estate planning? There are six documents that should be part of most everyone’s  estate plan. Plus, you should keep them updated and current. Also, don’t forget about assets with your beneficiary designations. For most Iowans, that’s good – six documents, keeping them current, and also remembering about those assets with beneficiary designations.

Sure, estate planning is complicated, but not that complicated. I’ll show you.

Six “must have” documents of your estate plan

There are six documents that should be part of most everyone’s estate plan:

  1. Estate planning questionnaire
  2. Will
  3. Power of attorney for health care
  4. Power of attorney for finance
  5. Disposition of personal property
  6. Disposition of final remains

We’ll go through each document briefly, so you have a sense of what each entails.

Estate Plan Questionnaire

Estate planning involves facing heavy questions, and depending on the amount of assets and beneficiaries you have, may take quite a bit of time and thought. I recommend clients (and even those who aren’t my clients) complete an estate plan questionnaire.

An estate plan questionnaire is an easy way to get all of your information in one place, and it should help you understand and prioritize estate planning goals. (I must also admit a questionnaire makes it easier for your attorney to build your estate plan!)

As with any project, it helps “to begin with the end in mind.” A questionnaire can help get you there.

Last Will and Testament

Now let’s get to the will. The will is the bedrock document of every estate plan, and it’s a little more complicated than other documents.

With your will, you’ll be answering three major questions:

  1. Who do you want to have your stuff? A will provides orderly distribution of your property at death according to your wishes. Your property includes both tangible and intangible things. (An example of tangible items would be your coin collection. An example of an intangible asset would be stocks.)
  1. Who do you want to be in charge of carrying out your wishes as expressed in the will? The “executor” is the person who will be responsible for making sure the will is carried out as written.
  1. Who do you want to take care of your kids? If you have minor children (i.e., kids under age 18), you’ll want to designate a legal guardian(s) who will take care of your children until they are adults.

Power of Attorney for Health Care

Assorted pills

A power of attorney for health care designates someone to handle your health care decisions for you if you become unable to make those decisions for yourself. This essentially gives another person the power to make decisions on your behalf. For example, if you don’t want to be kept alive with machines, you can clearly outline that in your power of attorney for health care. But keep in mind that power of attorney for health care isn’t just about end-of-life decisions – it can cover any medical situation.

Power of Attorney for Finances

The power of attorney for financial matters is similar, only your designated agent has the power to make decisions and act on your behalf when it comes to your finances. This gives them the authority to pay bills, settle debts, sell property, or anything else that needs to be done if you become incapacitated and unable to do this yourself.

It might be obvious by now, but I’ll say it just in case: choosing an agent for a power of attorney requires that you think long and hard about who would be best suited for the job and who you trust.

Disposition of Personal Property

Now, let’s get to the disposition of the personal property. This is where you get specific about items you want particular people to have. If you’re leaving everything to one or two people, then you may not need to fill this out. But, if you know you want your niece Suzie to have a specific piece of jewelry, and your nephew Karl to have that bookshelf he loved, then you’d say so in this document.

Disposition of Final Remains

We come to the disposition of final remains. This document is where you get to tell your loved ones exactly how you want your body to be treated after you pass away. If you want a marching band and fireworks shooting your ashes into the sky (that’s a thing, by the way), then this is where you make it known. It can be as general as simply saying “I want to be cremated,” or it can be specific and include details of plots you’ve already purchased or arrangements you’ve already made.

Keep updated and current

OK, so you’ve gone to an estate planning lawyer, and these six “must have” estate planning documents have been drafted and signed. What else? You need to keep these documents updated and current.

If you undergo a major life event, you may well want to revisit with your estate planning lawyer, to see if this life event requires changing your estate planning documents.

What do I mean by a major life event? Some common such events would include:

  • The birth or adoption of a child or grandchild
  • Marriage or divorce
  • Illness or disability of your spouse
  • Purchasing a home or other large asset
  • Moving to another state
  • Large increases or decreases in the value of assets, such as investments
  • If you or your spouse receives a large inheritance or gift
  • If any family member, or other heir dies, becomes ill, or becomes disabled

This is just a short list of life events that should cause you to re consider your estate plan. There are many others.

Don’t forget about your beneficiary designations

There are six “must have” estate planning documents, plus you need to keep them current. Also, don’t forget about your beneficiary designations. For example, savings and checking accounts, life insurance, annuities, 401(k)s, pensions, and IRAs are all transferred via beneficiary designations. These beneficiary designations actually trump your will.

Regarding assets with beneficiary designations, you must make sure that designations are correctly filled out and supplied to appropriate institution

What other documents might you need resides these six “must have” estate planning documents?

For most Iowans, probably the vast majority, what I’ve outlined above is enough. There may be folks who have more that $5 million in assets, or who have complex assets (for example, more than one piece of real estate), or own part or all of a robust business, or otherwise have unusual situations. In such cases, a trust may be helpful. But that will be more “advanced” estate planning. What I’ve described above is an excellent start.

See? That wasn’t so bad!

Glasses on estate planning documents

There it is in a nutshell. This is what goes into an estate plan.

Whether it’s complicated or simple, it does require some thought and time. But, it’s worth the investment – a proper estate plan can save you and your estate costs and fees; help your family and friends; and provide you peace of mind.

Perhaps most importantly, through proper estate planning, you can help your favorite charities in ways large and small. Really, without estate planning, it’s not possible, at your death, to help nonprofits you care about.

Begin today

Why not start right now on your own plan for the future with my free estate plan questionnaire? It’s provided to you free, without any obligation. I would love to discuss your estate plan with you; reach out at any time by email, gordon@gordonfischerlawfirm.com, or cell phone, 515-371-6077.