Ask the Expert: What Is An Estate Plan And Why Do You Need One?

contributed by: DebbieCunningham

By Debbie J. Cunningham, attorney

Debbie Cunningham is an estate planning and probate attorney located in Irving, Texas. She works with individuals, families and business owners to ensure they are prepared for the future. You can find her blogging at http://blog.netoffer.com/irvinglaw/. 

An estate plan is a collection of documents that address what should happen upon your death or incapacity. While some might think this is a bit depressing, it is the greatest gift you can give your loved ones. By taking the time to visit with an attorney and prepare these documents, you provide clear direction to your loved ones which can ease their burden should you become incapacitated or after your passing.

The four documents that create the foundation of a good estate plan are a will, medical power of attorney, durable (financial) power of attorney and a living will. Each of these documents provides protection for specific issues associated with death or incapacity.

A will details your wishes after you pass away, providing direction for a smooth transition for the loved ones you leave behind. It will designate an executor who is responsible for taking control of your estate and ensuring your wishes are carried out. Your will should name caregivers for your dependents and may also identify people who should not be caregivers. Finally, you will identify how to distribute your property. Having these decisions made and in writing will make the transition as painless for your loved ones as possible.

A medical power of attorney appoints a person to make medical decisions if you are unable. The state statues provide for others to make decisions for you if you do not have a medical power of attorney. However, there is a strict order of priority in the statutes that may not match your wishes. A medical power of attorney is only effective if you are unable to make decisions for yourself.

A durable (financial) power of attorney appoints a person to make financial decisions if you are unable. This is a flexible document that can be used to give limited or unlimited power over your financial affairs. It can become effective immediately or only if the named individual becomes incapacitated.

A living will expresses your wishes for end of life decisions and can appoint a person to make decisions if you are unable. This document differs from a medical power of attorney because it is only effective if a doctor has determined you have a terminal or irreversible condition.

These four documents create the foundation of a good plan. However, your estate plan should be tailored to the needs of your situation. As a result, you may want or need to include additional planning documents. A few of the additional planning tools more commonly used are trusts, declaration of guardian for a child, and declaration of guardian in advance of need.

The requirements relating to the validity of each of these documents are found in state law. As a result, an attorney should be consulted to ensure your documents are valid in your state of residence. If you have a job that requires you to relocate regularly, a trip to a local attorney should be on your to do list any time you move.