Five Estate Documents Everyone Must Have

HIPAA Authorization Form

Originally, the Health Insurance Portability and Accountability Act (HIPAA) was enacted by Congress to provide strict medical privacy to patients.

When you see a doctor, typically you can name other people who can view your medical records, speak with your doctors and generally access information about your healthcare. Ensuring access to the right family members and advocates will help if you are incapacitated.

Also important for parents is to make certain they have authorization forms for children away at school or over the age of 18.

Durable Power of Attorney (POA)

If you’re ever incapacitated, disabled or out of pocket, who can take control of your financial affairs? This document defines who can be your financial proxy.

Whenever you may be inaccessible but still alive, you will want someone you can trust making financial decisions, accessing your bank account and generally acting on your behalf to keep your money safe and available, should you or your family need it. While many people choose a family member for this purpose, you may choose anyone that you know you can rely upon.

Every state has different requirements for this document, so while it can be created yourself, more on that here, it’s recommended to use a professional so you can ensure it’s done correctly.

Medical Power of Attorney

In a similar vein, if you are disabled or otherwise can’t make medical decisions for yourself, a medical POA defines who you would like to do so. Many people choose a family member; however, you can choose anyone that you wish.

This form is generally available for free online with a quick search. When using an online resource, make sure to also look up your state requirements to make sure the form meets them and is not outdated.

Will

At the heart of every wall-laid estate plan is a will. Wills cover what should happen when you pass away–including any assets, childcare, property and beneficiaries.

Typically, the will defines three types of people to help:

• Trustee: responsible for distribution of money left in trusts. This person is usually committed to serving in this role for a lifetime.
• Executor: carries out and executes your plans laid in your will. Usually serves a short-term appointment, simply to interpret documents and settle up your estate. Without an executor, decisions can be left to the courts, locking up your assets for years.
• Guardian: sole responsibility is caring for your children until of adult age.

For executors, it’s important to define a succession line so that your estate is always handled by someone that you trust. Sometimes executors may decline the role so it’s important to discuss your plans with them in advance and think of who else can fill their duties. CPA and Financial Planner Brittany Frazier recommends going 3 to 4 people deep on these assignments.

“The trustee and the guardian should always be separate people. We never want to have the same person taking care of your kids to have a financial interest. We always like to think of the best in people; but sometimes you never know,” cautions Brittany.

In addition, Brittany also suggests that guardianship of your children should be left to individuals–not married couples. This avoids any complications for your children due to divorce or other complications.

For more to consider on who to name in these roles, listen to season 4, episode 3 of the Accumulating Wealth Podcast. Hosts Hunter and Judson discuss trusts and how to choose executors and guardians while planning your trust.

Living Will

Also known as advanced medical directives, a living will is essentially a list of do’s and do not’s for your end-of-life care.

It can also outline timeframes for how long you may want to be treated in a particular manner. If you aren’t able to express your wishes, this document guides your family and healthcare professionals through how you would like to be treated in case of serious illness.

The most up-to-date living will form for your state can most reliably be found in a hospital or through an estate attorney. Forms available online run the risk of being outdated.

Creating Estate Planning Documents

Though there’s the option of handling these things yourself, state laws are constantly changing, which could make documents created at home null and void without you even knowing it.

Having an estate attorney help you create and maintain these so they are always meeting state standards, and therefore are honored, is best. Any qualified estate attorney can help you create all of these as long as they get a full picture of the kinds of assets you own and your net worth.

This is why it’s a good idea to also involve your financial planner. They can balance your wishes with advanced tax planning, utilizing tax-exempt trusts, family limited partnerships and other tactics to protect your heirs during the process.

It is always tempting to create these documents yourself or with an inexpensive online service; however, working with a planner and lawyer will always yield the best results.

“Sometimes I see clients set up complex trusts and advance arrangements for ‘creditor and asset protection’ and it can be expensive to administer. And, it may even be unnecessary for your personal financial situation. That’s why it’s important to consult with an attorney and a planner,” notes Brittany.

It’s also a great idea to review your estate planning documents yearly. You’ll want to consider people you have chosen for varying roles like executor, any major assets you’ve purchased and life changes like births or divorces.

Even though planning for a time when you are gone can be intimidating, looking at it objectively helps. The ultimate goal is to make sure your wishes are documented and respected.

“There are so many emotions around this,” Brittany said. “Working with an advisor will help with the emotional aspect. In a way, it’s like peeling back the layers of an onion.

“With my clients, we sit down and really break down the decisions a little bit further. It begins to peel back the emotions and helps my clients think about what they really want to happen when they are gone.”