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4 Basic Estate Planning Documents

Posted by attorney James Schleiffarth

As any individual or family looks to the future, there is a myriad of difficult decisions to make and clearly too many planning items to address at once. But before facing these sometimes overwhelming tasks and considerations, there are four fundamental life and estate planning documents that everyone needs to have. The preparation of a will, powers of attorney over health care decisions and financial decisions and a health care directive (often referred to as a “living will") is absolutely essential for everyone, no matter their income or wealth status. Other planning considerations are undoubtedly important, but these four core documents make up the basis of anyone’s life and estate plan.

The preparation of these four documents is not an overly burdensome or expensive process. A skilled attorney can prepare these documents in a relatively short timeframe and should offer a quite reasonable fee, especially if your situation and desires are not overly complicated. While each life and estate planning situation is entirely unique and requires personal consideration and attention, a discussion of the principles and details of these core documents will help you get a start on the process.

1. Will

Overview: Often referred to formally as one’s “last will and testament," a will should be a part of every individual’s financial and family plan for the future. Everyone from average-income folks to very wealthy individuals benefit from this sometimes simple, yet critical document.

What does it do?: A will designates who should receive one’s property upon their death. Wills designate the recipients of property (called “legatees" or “devisees") ranging from sentimental family property, to funds in a bank account to the family residence. While a will may spell out a detailed list of “who gets what," it also gives categorical gifts and should have a “residual clause" which provides for all unmentioned items to pass to a named recipient(s). In addition to creating the scheme and details for posthumous gifts, a will often includes the following:

(a) nomination of guardianship for minor children

(b) establishment of a “testamentary trust" to be formed upon death

(c) naming of a personal representative of the estate

(d) granting of gifts to specific charities or other organizations

What happens if I don’t get one?: If an individual dies without having ever prepared and signed a will, the distribution of their property will be left to the laws of the state in which they reside or where the property is located (see Mo Rev. Stat. Ch. 474). Referred to as “intestate succession" this process may distribute property in a manner unsatisfactory and confusing to both the decedent and potential heirs and devisees. Missouri laws are not tailored to individual wishes, needs or circumstances. For example, one-half of a decedent’s property may pass to their children (regardless of the quality or even knowledge of these relationships), while their spouse is still living and remains dependant on this money and property (see Ch. 474.010). Property can potentially be given to the state of Missouri, in the event no appropriate heirs are available (see Ch. 470). While there are no laws requiring the preparation of a will, there is a little question to its benefit.

2. General Durable Power of Attorney

Overview: A general durable power of attorney is a key component of anyone’s life and estate plan. Life circumstances may place an individual in a position (or location) where they are unable to make or execute key financial decisions for themselves. A general durable power of attorney addresses these concerns and circumstances.

What does it do?: A general durable power of attorney grants a named individual (called the “attorney-in-fact") the authority to act in your behalf with respect to your financial affairs. A properly-drafted power of attorney will be clear in its specifics and will limit this authority in accordance with the needs and wishes of the individual. In other words, “financial affairs" can be specified to mean one specific bank account or piece or property, or can be specified to refer broadly to all financial affairs. For example, a power of attorney can be prepared to only grant your attorney-in-fact authority to write checks from a specific checking account or to sell a particular piece of real estate. Furthermore, a power of attorney document can be written so as to only become effective (i.e. only give the person authority) upon the occurrence of some specified event, such as your mental or physical incapacity. If so desired, the attorney-in-fact would have no authority whatsoever prior to the occurrence of that event. Powers of attorney are often prepared between spouses or other close family members in this respect. Finally, a power of attorney can be “durable" so as to exist throughout your mental or physical incapacity, or can be made to only function until that time. As indicated, these documents are very flexible and can be adapted to meet the needs and wishes for your particular circumstances.

What happens if I don’t get one?: General durable powers of attorney are about your ability to have your property and financial matters handled effectively, conveniently and quickly in the event of difficult or unforeseen personal circumstances. Without a power of attorney, if you become incapacitated, someone would have to seek the appropriate determination through a court process to be granted authority to make these sorts of decisions. In addition to the obvious timeliness and convenience problems of not having a power of attorney, the door would also remain open to disputes regarding your capacity and ability to make your own decisions. In the event of any question as to your whereabouts, further complications would also be anticipated.

3. Advance Health Care Directive

Overview: An advance health care directive, or “health care declaration" has gained popularity in recent years.

What does it do?: A health care declaration specifies the type and level of health care (or life support) that you want to receive in certain circumstances, if you are unable to effectively communicate your wishes. Typically, a living will would indicate life saving/prolonging procedures that you do not want to have applied to you. Further the health care directive would indicate life-sustaining procedures that you would like withdrawn in the vent you suffer from particular conditions or ailments that you indicate in the document. A living will may (if so desired) defer to the guidance of a specifically-named individuals with respect to these decisions.

What happens if I don’t get one?: Advance Health Care Directives are about you having control over your body and the procedures used to sustain your body when you are unable to make those decisions. In the absence of a living will, these decisions will be left to medical professionals and potentially to family members who may or may not be aware of your beliefs and preferences (or may be unwilling to follow your preferences). Discord and potential ugliness can ensue, both in and outside the court room.

4. Power of Attorney for Health Care Decisions

Overview: A power attorney for health care decisions complements a health care directive but is unique in its purpose and function. It is generally advised that you have both a health care directive and a power of attorney over health care decisions.

What does it do?: A power of attorney over health care decisions grants a named individual (often a spouse or other family member or close friend) the authority to make certain healthcare-related decisions on your behalf. Typically, this document would grant authority to a spouse or close friend or family member to make decisions for you in the event you are not in a physical or mental state to be able to do so. As in the case of other powers of attorney, the authority you grant to someone else can and should be limited in its scope pursuant to your wishes and preferences. In its own fashion, this document can also help spell out the sorts of treatments you desire while adding some clarity to the question of those which you do not desire. It should be noted that a power of attorney over health care decisions is an entirely separate document from a healthcare directive / living will, in both form and function.

What happens if I don’t get one?: Powers of attorney for health care decisions are about your ability to have health care decisions made effectively, conveniently and quickly in the event of your physical or mental incapacity. Without a power of attorney, if you face an event in which you are unable to make or communicate your own healthcare-related decisions, these decisions would be made by someone, likely a healthcare professional who is unaware of your desires and/or preferences. Furthermore, someone could seek this authority through a court process, but this obviously fails to address the timeliness concerns and again opens the door to dispute and potential litigation.

* Jim Schleiffarth practices in the areas of life and estate planning for individuals and families. Mr. Schleiffarth’s practice emphasizes superior client service, straightforward legal counsel and reasonable fees. Schleiffarth Law Firm represents estate planning clients of all income and wealth levels.

This article is for informational purposes only and should not be construed as legal advice with respect to any particular circumstance or life and estate plan. For additional information, please contact Jim Schleiffarth, Schleiffarth Law Firm LLC, St. Louis, MO, (314) 315-4117, jks@sch-law.com.

ESTATE PLANNING THAT MAKES SENSE

Schleiffarth Law Firm LLC • Jim Schleiffarth, Esq. • St. Louis, MO

314.315.4117 • jks@sch-law.comwww.sch-law.com

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