Although estate planning can correctly be viewed as preparing for a person’s eventual demise, a truer definition would include all that an estate plan can accomplish during a person’s lifetime.
Upon death, a trust-based estate plan allows for orderly distribution of the trust assets. Many assets not placed in the trust during a person’s lifetime are added into and then distributed by the trust after death via the “pour-over will.” Additionally, the “nomination of guardian for minor children” document allows a person to advise the court of their preference (and alternates) for who would care for their minor children if they were to pass away.
Although these functions are vital, an estate plan contains much more than documents that become operative upon a person’s death. The estate plan also provides important features that can be extremely important during a person’s life.
The “durable power of attorney” names who has the authority to make financial decisions when the person is unable to during their lifetime. This document can be set to become operative immediately, or upon a future event such as a person’s incapacity.
The “advance health care directive” provides guidance as to a person’s wishes regarding medical care and identifies who has the authority to make medical decisions if the person cannot do so. The “HIPAA authorization” acts in concert with the advance health care directive and grants permission for medical staff to share information with parties listed on the HIPPA form.
The after-death features of an estate plan are often thought of first. This helps to explain why many people have a reluctance to ponder their mortality and create their estate plan.
A better way to approach this process is to consider the features that are of benefit during a person’s lifetime. The durable power of attorney, advance health care directive and HIPAA authorization provide not only peace of mind, but can also provide important structure should you become incapacitated and unable to make your own decisions.
When you can’t, your estate plan can!