Financial Insights

Five Estate Planning Documents Everyone Must Have

We have a strong relationship with a couple who did not have estate planning documents before we were introduced. The husband was starting to become forgetful.

Our advice early on was to get their estate planning documents in order.  Thankfully, they did and later, when the husband had to be put into an assisted living center, they were well prepared; his wife had signed on as power of attorney for all of his financial and health care matters.  What could have been a stressful situation for them and the rest of their family became straightforward and routine?

The key to ensuring the same for you and your family, and the basis of implementing any estate plan, is to make sure that certain documents are in place.

Here are the five crucial documents that are needed for a successful plan.

  1. Will

The fundamental estate planning document is a will, which establishes the individual responsible for administering your estate, as well as the beneficiaries. Without this document in place when you die, state intestacy statutes will take effect and create an estate plan on your behalf, which may not be what you have in mind.

If no beneficiaries under the state statute can be found, then your assets may end up going to the state.

  1. Durable General Power of Attorney

A durable general power of attorney authorizes someone to act on your behalf in financial and personal business and tax affairs, in the event that you become incapacitated and not able to make such decisions for yourself.  If the power of attorney is “durable,” it remains effective through any subsequent incapacity and it ends at your death when the executor of your will takes over.

  1. Health Care Proxy

Another basic document that should be included in estate plans is a health care proxy. By executing this document, you appoint a person to act as an agent for your medical decisions if a time comes when you are unable to make such decisions.

For example, “If you are under anesthesia and the doctor requires an immediate decision as to treatment, your designated agent under a medical power of attorney may make such a decision. It’s important that you and your agent discuss the wishes in advance.

  1. Living Will

Unlike the powers of attorney documents, a living will does not appoint a person to act on your behalf. Instead, a living will document your wishes about being kept alive “in case of a terminal condition or a persistent vegetative state”.

In some states, the operative document is the living will while in others the courts will only enforce the health care proxy.  As a result, and in either case, it is common to have both prepared since the living will provides guidance to the health care agent on the patient’s wishes.

  1. HIPAA Authorization

Generally, a medical power of attorney will include a provision, known as a HIPPA authorization, under the Health Insurance Portability and Accountability Act, granting your agent access to your medical records. Without this specific authorization it is unlawful for a health care provider to disclose health-related information to a third party.

Without these five basic estate planning documents, things can become difficult and stressful, not only for you and your spouse but for any friends and family who you may rely for advice and assistance.

Of course, other estate planning techniques and documents may be required for individual situations and where a significant amount of wealth may trigger state or federal estate and inheritance taxes. Regardless of your wealth or family status, however, these five documents are still fundamental to anyone’s plan, are easily obtained and represent responsible planning for any individual.

Please contact your ACM advisor for additional information and with any questions or concerns you may have.

The foregoing content reflects the opinions of Advisors Capital Management, LLC and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.


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