Estate planning is all about creating a course of action for your assets after you have passed on. In its simplest form, the purpose and value of estate planning is to ensure that you get the most of what you own into the right hands with as little collateral as possible. The best way to do this depends on what you own, how you own it, and to whom you would like to bequeath it after your death.
However, some might argue that the one thing most people miss when consulting for their estate is to not only plan for their death, but for life as well. Incapacitation does not equal death, yet for all intents and purposes, if you find yourself permanently disabled then it may be within your best interest and in the best interest of your family to plan a course of action in the case of major disability.
Your estate is here right now, in the form of all your assets and belongings, and there are ways you can ensure that disability will not become a major hindrance in making sure that your estate is distributed as you see fit.
Must-Have Estate Planning Documents
The law exists to protect individuals and their rights. Through court, we can defend and prosecute, argue and settle. And in the case of inheritance, it is the law that provides us with tools capable of planning ahead for the inevitability of death. However, there are times when accidents, diseases, and unfortunate tragedies leave us alive, yet only in the technical sense.
Estate planning allows you to deal with this eventuality through the use of several key documents that can help you establish a clear list of protocols to follow in the event of your disability. They also allow you to control your medical and financial privacy in the event of a disability. Here are these documents, and the considerations you must make before creating them.
A living will is a document detailing what kind of medical care you would like to receive if you are close to death with no hope of recovery. It may also be used to specifically detail the procedures you would not want to be done to you. The use of a living will is to make your wishes clear, saving your family from making hard decisions regarding your life without fully knowing what you would have wished for.
Medical Power of Attorney
Also referred to as an advanced health care directive, a medical power of attorney allows you to choose an individual to make medical decisions about your health and life if you are unable to do so. Giving someone a medical power of attorney basically, puts your life in their hands. This person is referred to as a health care agent.
Durable Power of Attorney
A durable power of attorney gives someone the ability to make financial decisions on your behalf if you are incapacitated and unable to meet your commitments. This includes handling investments, bills and any and all financial obligations.
HIPAA or the Health Insurance Portability and Accountability Act prevents doctors from sharing any information regarding your medical condition and treatment with anyone, including your own relatives. You can specify in an HIPAA form whom you do wish to keep in the loop.
Organ Donation Authorization
If you specifically wish for your remains to be used as donor organs, then you must create a document to prove this. The organ donation authorization process is quite simple, and can even be signified on your driver’s license.
Planning for the Inevitable
Disability is not death, and these documents do not effectively help you distribute your assets and belongings in case you die. If you wish to avoid the worst case scenario – intestate succession as decided by a court entirely unaffiliated with your family – then you need a proper estate planning tool. The two most common choices tend to be the will and the trust, and they each have their uses depending on your estate and specific needs.
However, in most cases, you will want to choose to create a living trust of your assets rather than a Last Will and Testament – and here is why.
Trusts Over Wills
When it comes to planning for disability – and in general – a living trust is a far more appropriate way to approach the matter of inheritance than a will. Unlike a Last Will and Testament, which only goes into effect after your death, a living trust will go into effect upon severe disability with no hope of recovery.
While a living will can help you detail how you want to go out, it will not help you distribute your assets while you lie incapacitated in your deathbed. Choosing to handle your estate through a Last Will and Testament will also subject your entire estate to the scrutiny of a probate court, which can cost both immense amounts of money and time.
A living trust is a simpler, much more cost-effective and far more comprehensive way to deal with your estate, as it allows you to keep your assets private while giving you more control over how to distribute them. To those who feel that creating a living trust is not within their interest due to the more modest size of their estate, there are other ways to bypass probate and ensure that your belongings go to your children and loved ones upon death.
Making your properties and/or accounts payable/transferable-upon-death to designated beneficiaries gives you the ability to transfer ownership over something over to your loved ones without probate, however, this only applies to death, not a disability. When planning for disability, nothing does the job quite like a trust. At the end of the day, you may still need to write up a will for two reasons:
- To catch any property that you may have recently acquired, in the event that you die before you get the chance to include it in your trust.
- To determine the guardians for any minor children you leave behind.
If you are worried about the complications behind creating a living trust, contact a legal professional. Better than any advice or information sought out online, a face-to-face conversation with a legal professional on the topic of estate planning in the context of your own assets and belongings will be much more helpful. They can simplify the process and help you make setting up a trust just as easy as writing up a will.