A good “Estate Starter Pack” is to put in place the Big Five Documents of a basic estate plan; Last Will and Testament, Durable General Power of Attorney, Health Care Power of Attorney, Nomination of Conservator, and Living Will
Level One Adulting Starter Pack: A Basic Estate Plan
Many of our trust clients have children who are over eighteen, and around the time of that milestone birthday for the first child, the parents realize they can’t keep making financial, legal, and health decisions for their children anymore. And this is even if the kids are not fully ready to handle these things 100% on their own, but nonetheless the law recognizes the eighteen-year-old’s legal independence. That’s when I get the call about setting up health and financial powers of attorney so the parents can continue to legally help with major decisions, transactions, and other matters until they are ready.
But what happens when they reach that point of independence, usually after college or having been in a steady job for several years, but not to the point where they are married or parents themselves? They have accumulated some assets, they are starting out their own lives, and contingencies need to be planned for in case of an unexpected crisis. That’s when the kids need to put in place their own estate plan, but it might not need to be as thorough as having their own revocable living trust plan.
Probably a good “Estate Starter Pack” is to put in place the Big Five Documents of a basic estate plan:
- Last Will and Testament: This is the basic estate planning document that everyone tends to hear about from attorneys, but it does mean that your estate must be taken through the probate court system by your chosen executor before the remaining assets go to your chosen beneficiaries. For many younger, healthier individuals with a relatively small accumulation of wealth, there is not a huge need for assets to go to beneficiaries quickly and efficiently where a revocable living trust would be more appropriate. In other words, a Will is “good enough” in many of these circumstances.
- Durable General Power of Attorney (a.k.a. the “financial” power of attorney): In the event you become incapacitated, your “power of attorney” can jump in to handle legal and financial responsibilities for you, such as making sure bills are paid, money is moved around, and overall making sure that when you get out of the hospital that you are not left with utilities turned off and assets being repossessed.
- Health Care Power of Attorney: Just as important as financially caring for you is having someone to manage your health care by meeting with doctors, discussing courses of treatment, and making decisions in your best interests. (Choosing Health Care Agents Checklist: https://www.plainenglishattorney.com/pl/2147654426 )
- Nomination of Conservator: While strictly speaking, a conservator, also known as a guardian for an adult, shouldn’t be necessary if you have the financial and health care powers of attorney, it is still important to have this document to let a court know who you would want to be the conservator of the person (health) and who would be the conservator of the estate (financial) should you be incapacitated for such a long period of time that a court had to appoint someone. It is highly recommended that the conservator of the person be the same list of people as the health care power of attorney and that the conservator of the estate be the same list of people as the durable general power of attorney.
- Living Will: One of the worst things people can do is leave the decision to “pull the plug” or not on someone else. I have often seen clients who had to make this difficult decision for their own parents. As difficult as that is, it pales in comparison to parents having to make that decision for a child of theirs. By having a Living Will, also known in North Carolina as a Declaration of a Desire for a Natural Death, you can make this decision ahead of time. Even though there is often “paperwork” for the health care power of attorney agent to sign, neither they or the family will be put in the position of having to make that terrible decision.
For both health and financial decisions, it is common for many people in their younger to mid-twenties to still want their parents making these decisions on their behalf, but it is highly recommended that only one person at a time be empowered to handle these tasks (although it is OK for one person to handle financial decisions and the other handle the health care decisions; just don’t do “co-powers of attorney.”) However, who makes these decisions on your behalf is entirely up to you. Welcome to just another aspect of adulthood.
For more information on these documents plus the revocable living trust when you accumulate more assets, get into a serious relationship, or even have children of your own, check out the program at www.freetrustcourse.com.