What is Needed for a Complete Estate Plan?

By Emilee H. Scheeff, Esq.

Estate planning is something that no one likes to think about, but it is a necessary evil that we must all consider. People come up with all kinds of excuses as to why they haven’t done their estate planning. However, in order to make things easier on your loved ones if something terrible were to happen, it is best to have everything laid out for them to follow during these difficult times. A complete estate plan will prepare you for situations other than death, such as incapacity, which are equally as difficult. In order to be fully prepared, there are four or five main documents that you need in order to have a complete estate plan.  These are discussed below.

Last Will and Testament

This is the one document that most people think about when someone mentions estate planning. This document lays out how you would like your assets to be transferred after your death and appoints the person that you want to have in charge of handling your estate. Without this document, Alabama law dictates where your assets go upon your death, and it becomes a “race to the courthouse” for who will administer your estate. One thing that most people aren’t aware of is that without a will, when the first spouse passes away half of their assets may pass to their children when most would prefer for everything to go directly to their surviving spouse. This can cause huge issues for the surviving spouse if the children own an interest in property such as the family home and a rift arises. Additionally, if your children are under nineteen at the time assets pass to them, these assets must be held in trust which will be set out in your will. If this is not provided for, then the children cannot manage the assets on their own. The only way to access these assets would be to ask the Court to appoint a conservator to manage the assets for them until they turn nineteen. A conservatorship is extremely expensive and requires a significant amount of court oversight.

Durable Power of Attorney

The next document is a power of attorney, which is equally as important as having a will. It allows you to plan for the instance when you are unable to make financial decisions yourself. If for some reason you were to become incapacitated and unable to make your own financial decisions, who would you want to go to the bank for you, pay bills, and decide how to handle your assets? The power of attorney will appoint someone to serve in this role for you as well as laying out in detail what powers this person will have. Some people believe that just having their child on their bank account will be sufficient, but it is not. What if your car or house needed to be sold to help pay for your care? Without a power of attorney, your children or spouse would have to petition the court to be appointed as your conservator which, again, is costly and time consuming. If you had a power of attorney in place this would not be an issue for the person that is helping care for you.

Advanced Directive for Health Care

The advanced directive serves two important functions regarding your health care. First, it allows you to document your wishes concerning medical treatments that you would or would not like to receive at the end of your life. Secondly, it allows you to appoint a health care proxy who will make health care decisions for you in the event that you are unable to make your own decisions. The perfect example of what happens when you do not have a complete estate plan that encompasses an advanced directive for health care is the case of Terry Schiavo. Most will remember her name from the news several years ago because of the legal battle that ensued between her husband and parents. Due to the fact that she did not have an advanced directive, her wishes were not documented, and the two parties disagreed as to what her wishes would be in her current state. If she had a complete estate plan that included an advanced directive, then this fight would not have taken place. This document also helps alleviate some of the burden on your loved ones in making the tough decisions regarding your care as you have already made them.

Durable Health Care Power of Attorney

This document sets forth the person that you would like to make all of your health care decisions (a health care proxy) and lays out all of the powers that your health care proxy will have regarding making your heath care decisions. Sometimes this is combined with the advanced directive into one document, and therefore this document may not be included in your estate plan. However, if your advanced directive for health care does not name a health care proxy and list out all of the powers that your health care proxy has, then this document must be included for a complete estate plan.

HIPAA Authorization

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) set strict standards that health care providers must follow in order to protect your health information. The HIPAA authorization allows health care providers to release your protected health information (PHI). This document ensures that this information will be shared with the person that is appointed as your healthcare proxy to enable them to make informed decisions concerning your healthcare. Without this document, health care providers are strictly forbidden from releasing this protected information to anyone, absent a court order directing them to do so. People argue that they typically sign these when they are admitted to the hospital and therefore this isn’t necessary. However, in the event that you are unconscious or for some other reason unable to sign this document, then the previously executed document will be available.

These four or five documents will provide you with a complete estate plan that will be extremely helpful to your loved ones in the event that one of these terrible situations arise. In selecting an attorney to help you put together an estate plan, be sure that they are offering you a “complete” plan as opposed to just a will.