Creating an estate plan is not just about telling your loved ones who gets your property after you die.
It encompasses decision-making during your lifetime, ensuring that those you wish to leave your property to are protected, and ensuring efficiency to save you and your loved ones time and money.
Powers of Attorney
There are two legal documents that allow you to name another person to make decisions for you in the event you cannot make decisions for yourself:
- 1Durable Healthcare Power of Attorney; and
- 2Durable Financial Power of Attorney.
1. The Durable Healthcare Power of Attorney is a document that names another individual (or individuals) to serve as your Agent for healthcare decisions in the event that you cannot make decisions for yourself. The document also lists the types of decisions you authorize them to make, and your wishes for your healthcare, including placement in facilities, psychiatric treatment, and other types of treatment. Undoubtedly, you have heard of court cases and popular media stories where family members request court intervention because there is a battle over medical decision-making for a sick or injured person. The law makes it clear that certain information must be contained in a signed document by you that names a person to make these decisions and gives that person the full legal authority to carry out your wishes. The alternative is not very attractive. In the event you have not prepared this document and you are suddenly in the position of needing someone else to make medical decisions for you, for example, as the result of an accident, someone must petition the Court and carry out more costly legal proceedings in order to make these decisions for you. In Missouri, the process is called a “guardianship.”
Often associated with the Healthcare Power of Attorney, is a Living Will. This is a document that tells your family, caretakers, and medical providers your end-of-life decisions. Sometimes, this can be confused with DNR (or Do Not Resuscitate), but they are different.
A Living Will does not mean that you refuse all resuscitative measures or other life-saving procedures under any circumstance— but instead, it is limited by the circumstances where you are terminal or you are in a permanent vegetative state.
2. The Durable Financial Power of Attorney, like the Healthcare Power of Attorney, allows you to appoint an agent, typically called an “attorney-in-fact,” to make most other decisions for you, including handling your real estate, financial accounts, non-medical personal decisions, social media accounts, filing of taxes and handling government benefits on your behalf. While the Power of Attorney is not absolute, it is important that it is drafted well. Although there are some defaults under the law, generally, in order to allow your agent to make decisions for you, the specific power must be authorized under the document. This document, like the healthcare power of attorney, is intended to keep your loved ones out of court if a decision must be made on your behalf. In the event something happens to you, and you have not prepared the Financial Power of Attorney, your loved ones will need to petition the court for a guardianship, conservatorship, or both, in order to make decisions for you.
Documents to Manage and Distribute Your Estate
While the above documents are used to enable others to make decisions for you during your lifetime, those agents lose their power to act for you upon your death. In order to pass your property to family, friends or charities, you and would like to direct how your property is distributed (or held back in a trust, if such is the case), you will need additional documents. There are two typical documents that are used to help you meet your goals:
- 1A Last Will & Testament; and
- 2A Trust.
A Last Will & Testament is a document that is filed with the Court upon your death. In the Last Will & Testament, you can name beneficiaries, and even set up trusts that become effective through the court on your death. The Will ensures that your property is distributed to your heirs, but there are some disadvantages to your property be distributed under a Will. The Will forces your property to be handled through the Probate Court. While the complexity of a probate estate is dependent on a number of things, including the value and location of the property, and the number and type of heirs, it is generally more cumbersome and takes longer than distributing your estate through a trust, which is usually an entirely private matter.
A trust, on the other hand, can be set up and administered entirely privately, without court intervention. There are many types of trust, but a “revocable living trust” is used to allow you a way to administer your assets during your lifetime, at your incapacity, and on your death, without the necessity of involving the Probate Court. It provides for a clear line of successor trustees who will manage your trust assets for you during your lifetime if you are unable to manage your assets on your own, and upon your death.
For more information on Estate Planning, call Elder Care Law Practice at 314-932-5573 or contact us online.