A frequent mistake New Yorkers make is failing to properly plan for the future. One integral part of that planning is to have an estate plan that covers for various contingencies. Many might be under the impression that drafting estate planning documents is something that only wealthy people should do. This is wrong. Having an estate plan can take care of many different issues and potential issues, as well as avoid family disputes after the testator has passed on.
There are certain documents that should be part of any estate plan regardless of the person’s portfolio, property and means. Having a durable power of attorney, a will, a revocable living trust, a health care power of attorney, and HIPAA authorization are all essential. Understanding what these documents are and what they do is key.
The durable power of attorney lets an agent make decisions on behalf of the testator. It can be anyone. This person will make the decisions on behalf of the testator in the event he or she becomes incapacitated and cannot do it by themselves. A will lets the assets be distributed. It can also name guardians if there are minor children. The will is preferable to doing nothing, but it is important to remember that with a will, probate is necessary. Probate can be time-consuming and expensive. A revocable trust is viewed as a preferable option to a will as it prevents the delay that goes along with probate. In addition, a revocable trust is not public as a will is.
The HIPAA authorization will let an agent get medical information about the person. Privacy laws would prevent that if there is no HIPAA authorization. This allows the family or whomever is placed in charge to have all the information as to what is happening with the person. The health care power of attorney allows the agent to make health care decisions on behalf of the testator. That can include deciding whether to continue life support and the treatment that a person might receive.
There are so many factors that go into an estate plan that it is unwise to automatically believe that it is not necessary to have one based on financial limitations. Everyone can use an estate plan. For help in formulating one that is suitable, speaking to a legal professional who specializes in estate planning is the first step.
Source: forbes.com, “You Don’t Have to Be Rich to Need an Estate Plan,” Mark Enghari, July 25, 2017