Part 2: Testamentary Trusts: The Best of Both Worlds
Do Not Forget Other Important Documents
Even if you choose to include a testamentary trust as part of your will, there are other important estate planning tools you must have to properly protect yourself and your loved ones. Because a will only covers what happens to your money and property when you pass away, we must also plan for a situation in which you are alive but unable to make your own decisions, which is known as incapacity.
Financial Power of Attorney
A financial power of attorney allows you to choose a trusted person (the agent) to handle your personal financial matters without court involvement. The amount of authority your agent has is determined by the type of financial power of attorney you have prepared. It can be as limited or as broad as you would like. Another important consideration when preparing a financial power of attorney is choosing when the agent can act. One option is to enable the agent to act immediately once you have signed the document. A second option is to have a springing financial power of attorney that only becomes effective once it has been determined that you cannot manage your affairs. It is important to note that some states do not allow springing powers of attorney.
Medical Power of Attorney
A medical power of attorney allows you to appoint a trusted person as a decision-maker to communicate on your behalf or make healthcare decisions for you without court involvement.
Advance Directive or Living Will
An advance directive or living will allows you to convey your wishes regarding end-of-life decisions, such as how long to continue artificial hydration and nutrition or how long to continue artificial respiration when you are in a persistent vegetative state or have a terminal condition and with no chance of recovery. This document will help the decision-maker under your medical power of attorney make informed choices for your care.
A Health Insurance Portability and Accountability Act of 1996 (HIPAA) authorization form allows you to grant specific individuals access to your confidential and protected information (e.g., to get a status update on your condition or receive your test results) without giving those individuals the authority to make decisions on your behalf. Providing this information to your loved ones can help all parties stay on the same page even if only one person is authorized to make medical decisions on your behalf.
Nomination of Guardian
Some states have a separate document that allows you to nominate a guardian for your minor child. Some people prefer the separate document because they can change guardians with ease and without having to update their entire will or pour-over will. This document can be referenced in your will so that your nomination will be known during the probate process.
Some states allow for a separate document in which to name a person to make decisions for your minor child when you are unable, such as if you are incapacitated or traveling without your child and need to give someone authority to make decisions for your child in your absence. It is important to note that this document is only effective for a short period (typically six months to a year), and a temporary guardian cannot agree to certain actions, such as the child’s adoption or marriage.
Let’s Choose the Right Option for You and Your Loved Ones
There are many different options when it comes to crafting a plan that is right for you. We are committed to developing a plan that protects you, your loved ones, and your legacy. If you are interested in learning more about testamentary trusts or reviewing your existing estate plan, please give us a call.