There are a myriad of legal strategies you might consider implementing as you design your estate plan. Regardless, there are a handful of "must have" estate planning documents you must create before anything else.
You should have: (i) a will – everyone needs a will; (ii) a health care directive for decisions concerning treatment when you cannot make or communicate your own wishes regarding medical care; (iii) financial and healthcare powers of attorney authorizing "agents" that you know and trust to take care of your financial matters and make your health care decisions when you are unable to do so yourself; (iv) a HIPAA consent, a legal authorization that allows a loved one or friend to access your medical information; and (v) perhaps a trust (based on your situation) to manage, protect and eventually to distribute your assets.
Will. A will is a legal document that states your intentions for your estate when you pass away. Without a will, a person would die "intestate." In that case, Tennessee law divides and distributes the estate to surviving family members based solely on their relationship to the deceased. No consideration is given under state law to how "close" such family members were to the decedent or how good (or bad) their relationship was. Contrary to popular belief, a surviving spouse does not necessarily take everything when there are children.
A will has absolutely no legal authority until the maker of the will dies. Even then, the will must be given to the proper probate court to determine its authenticity and validity. Accordingly, your will has no authority to appoint financial or health care decision-makers (agents) for you if incapacitated by an illness or injury (more on that later). In many states, including Tennessee, a will is required to appoint the guardians for minor children in the event that both parents have died. What could be more important than appointing the people you want to rear your children if you are not around?
Health Care Directive. A health care directive, often known by other names such as an "advance directive," is a document you sign presently to specify the type and extent of medical and personal care you would want if you were unable to make and to communicate your own decisions. Everyone age 18 and older needs to have this fundamental legal document signed, a copy on file with their physician, and a copy given to each of their appointed agents.
How does a health care directive help my family?
A health care directive appoints the persons (whether in order of priority or as a "team") that you have selected to make end-of-life decisions, so your family and the medical staff know what to do (or what not to do). A directive can take some of the worry and anxiety out of your final days for your family, as they will know your wishes when it comes to making tough choices. With that in mind, choose your "point persons" carefully. They will be charged with carrying out some potentially difficult decision and, perhaps, dealing with some difficult family members.
Power of Attorney. This is a legal document giving another person — sometimes called "the attorney-in-fact" or "agent" — the legal authority to make decisions on business matters and other issues on your behalf. The exact scope of the power given is stated in the document, itself. It is important that the power of attorney be “durable”, meaning that it remains in effect even if the maker becomes incompetent. In any event, the power of attorney ceases when the maker passes away.
HIPAA Release or Permission to Access Personal Medical Information. This document should be right on top of or specifically incorporated within your health care directive. It is your authorization for named persons to view your medical records and discuss your care with medical providers. Without this document or specific authorization, your appointed healthcare agents may not have access to the information needed to make the tough decisions for you.
Trusts. These come in all sorts of shapes and sizes. Generally speaking, a trust is a legal entity with at least three parties: the creator of the trust, the trustee, and the beneficiary. With most "revocable living trusts," the same person may fulfill all three roles. Trusts are not always appropriate in every circumstance, but there can be distinct advantages to establishing a trust. The most common advantage is avoiding probate. This can help streamline administration of your estate should you become incapacitated and upon your death, keeping your plans private in the process. Some irrevocable trusts may protect trust assets from creditors. For example, trusts established under a will or revocable living trust can protect the inheritance and prevent family members from squandering an inheritances as a result of divorces, lawsuits and bankruptcies.
It depends on a great many factors. Consult the experienced estate planning attorneys at John Burns Estate & Elder Care Law, PLLC to thoroughly review your situation and your objectives.