Estate Planning is the act of preparing for the transfer of one’s assets after his or her death as well as preparing for the management of those assets if he/she becomes incapacitated and cannot act for him or herself.
An Estate Plan consists of those legal documents needed to transfer and/or manage those assets. The key is that by having an Estate Plan in place, you make the decisions and not state legislature or a court. A basic Estate Plan includes the following documents:
- Will. A Will disposes of your property after you die through the court process known as “probate”. A Will allows you to designate the person(s) you want to manage this process, names who is to receive your assets, and can name a guardian for your minor children. Without a valid Will in place, state intestacy laws will dictate how your assets are to be divvied up between your spouse and your blood relatives.
- Power of Attorney. A Power of Attorney allows you to designate someone to manage your financial affairs and your property in the event you are unable to make decisions for yourself. A Power of Attorney also lets you name your guardian in the event you need a guardian.
- Health Care Proxy. A Health Care Proxy allows you to designate an agent to make healthcare decisions if you are unable to make them yourself. In Rhode Island, these are called “Power of Attorney for Health Care”.
- HIPAA Authorization. The Health Insurance Portability and Accountability Act (HIPAA) is federal legislation that provides data privacy and security provisions for safeguarding medical information. As such, it is important to designate someone whom you trust to access your protected health information, especially if he or she is making decisions regarding your medical care. HIPAA Authorizations are often times included within the language of a Health Care Proxy.
- Living Will. A Living Will allows you to list medical treatments that you would or would not want if you become terminally ill and unable to make your own decisions. Although Massachusetts is one of the few states that do not recognize Living Wills, Living Wills can still be useful because is can guide Health Care Agents and attending physicians about the types of choices you would make.
- Revocable Living Trust. Rev
ocable Living Trusts hold title to your property. If you become incapacitated or if you die, your named successor trustee can manage the property that is in your Revocable Living Trust. Revocable Living Trusts also provide the advantages of:
- Avoiding probate – which can save time, money and provide privacy;
- Estate tax planning;
- Providing protections from beneficiary’s divorce, creditors and mismanagement.
In summary, Estate Planning allows you to decide what you want in advance in the event something unexpected or expected happens to you.
About Lauren Caisse