Estate Planning: The Essentials

While implementing thoughtful estate planning for their clients, financial advisors must remain steadfast in their efforts to get certain documents in place.
It’s crucial early on to get client’s estate planning documents in order—while both parties are still of sound mind and body, and in case, sudden early death may occur. Being well prepared for unexpected downturns of health, accidents, heart attack, etc. can ensure that both spouses have protections and legal rights in the worst of situations.
There are five documents that are crucial for implementing estate planning:
This essential estate planning document establishes who the individual responsible for administering the client’s estate planning is—as well as the beneficiaries. If a client dies without this document in place, state intestacy statutes step in and create an estate plan on behalf of your client—and it may not be what your client had in mind.
Durable General Power of Attorney
This document authorizes someone to act on your client’s behalf with regards to financial and personal business, as well as tax affairs—if the client is no longer of sound mind or body, or is incapacitated and can’t make these decisions for themselves. If the PoA is ‘durable,’ it remains in effect through your client’s continued incapacity. This document ends with the client’s death.
Health Care Proxy
A Health Care Proxy is a basic document that should be included in estate plans. By executing a Health Care Proxy, your client appoints a person to act as an agent if the client is incapable of making medical or health care decisions for themselves.
This covers the client in all types of precarious situations—for example, your client undergoes anesthesia, and there is an immediate need to decide upon treatment. This document would allow the designated agent to make these decisions for your client. It gives your client the ability to execute their wishes if they are not able to.
4. Living Will
A living will is different than the power of attorney documents because it does not appoint a person (‘agent’) to execute the client’s wishes. Instead, this documents the client’s wishes about being kept alive if there is a terminal condition or a persistent vegetative state.
It’s important to note that in some states, the living will is the document that takes precedence, whereas, in others, it’s the health care proxy. No matter what the case is in your client’s state, it is not uncommon to have both prepared since the living will provide guidance to the health care proxy agent as to what your client’s wishes are.
HIPAA Authorization
More often than not, the medical power of attorney documents include provisions known as the HIPPA authorization. This is under the Health Insurance Portability and Accountability Act and grants the designated agent access to your client’s medical records. Without this authorization, a health care provider cannot, by law, disclose health-related information to any third party.
In most situations, without these five essential estate planning documents, things can quickly become difficult and stressful. It’s important to address these with your clients to create a seamless estate planning session that can easily be executed should the need arise.