The ABCs of Estate Planning

Estate planning comes in two parts: basic and advanced.

A basic estate plan benefits both you and your loved ones in the event of your incapacity and upon your death. People plan when they are healthy to choose appropriate fiduciaries to handle their affairs. Without such a plan in place, the court will appoint a conservator if you are incapacitated and will appoint an administrator upon your death. The court will also appoint guardians for your minor children.

By taking the time to plan now, you make these decisions yourself instead of leaving it up to the court. Moreover, you choose your beneficiaries instead of having the state determine them for you; you are able to plan the manner and timing of distributions to those beneficiaries; and you can avoid probate and minimize taxes.

People who come to see us to discuss estate planning are discussing business issues at the same time. Thus estate planning has benefits to business and these benefits to business will have benefits to the estate.

Generally, the documents comprising a basic estate plan are:

• A revocable living trust
• A pour over will
• An advance health care directive or health care power of attorney and living will
• A durable power of attorney for financial matters, and
• A Health Insurance Portability and Accountability Act Authorization

Revocable Living Trust

People often use a revocable living trust to avoid probate, for tax planning and to control the manner and timing of distribution to beneficiaries. Unlike a will, which is a public document filed with the court, the trust is private. Property held in the name of the trust is not subject to probate proceedings.

You need to transfer your assets (e.g. real estate) into the trust, generally with the assistance of an attorney. You continue to control and manage the assets as you do now, but upon your incapacity, your named successor trustee manages the trust assets on your behalf without a court having to appoint a conservator. Upon your death, your successor trustee distributes the assets to your beneficiaries according to the terms of the trust.

Will

A “pour-over” will is typically used in conjunction with a living trust, to catch any assets that may not have been transferred to the trust, so they can be distributed according to the trust’s terms. You also nominate guardians for your minor children in the will.

Durable Power of Attorney

A Durable Power of Attorney for property management enables a designated individual to handle your non-trust assets (e.g. pay your bills from a non-trust checking account, transfer assets to your trust) in the even you are incapable.

Advanced Health Care Directive and Living Will

An Advance Health Care Directive or Power of Attorney for Health Care allows you to designate an agent to make health care decisions for you in the event you are incapacitated. In addition to the release and execution of health care records and forms and consent to surgery and the like, it can be used to express your preferences regarding life sustaining care. In some states, you express your directives to medical providers and medical institutions in a living will.

Health Insurance Portability and Accountability Act Authorization


A Health Insurance Portability and Accountability Act (“HIPAA”) authorization permits your designated agent to obtain protected medical information about you in order to handle your medical affairs.

These wrap through a basic estate plan and are the building blocks of advanced plans, which are used to transfer assets to the next generation. We’ll talk about advanced estate planning in this space at a later time. We’ll also talk about some common client comments about estate planning in this space, as well.

If you haven’t taken care of your own estate planning, there are a lot of great lawyers that can help you with these decisions. If you live near us, give us a call. We would love a chance to work with you. If you don’t live near us, give us a call anyway and we will route you to some very good people.

We can be reached at 617-357-9333.