Understanding Key Estate Planning Documents: A Guide for Your Initial Consultation

When preparing for an initial estate planning consultation, we thought it would be helpful to provide preliminary information regarding the key documents involved and a few critical considerations for each. Of course, your attorney will discuss each during your estate planning consultation and address the associated considerations in more detail during your time together.

Here’s a breakdown of the essential estate planning tools and their functions, so you feel prepared to complete an initial client survey in advance of your consultation and/or prepare questions to ask your attorney during the consultation that address your unique circumstances, thereby allowing you to make informed decisions regarding your estate plan.

NOTE: It is common for clients to leave sections of an initial client survey blank when submitting it prior to the initial consultation in anticipation of receiving guidance from your attorney.

Durable Power of Attorney (DPOA)

A Durable Power of Attorney grants a designated individual (the “Agent”) the authority to make financial and legal decisions on behalf of the person creating the DPOA (the “Principal”) in the event the principal is unable to manage their own affairs.

Considerations:

• Scope of Authority: Clearly defines the powers granted to the Agent to avoid overreach.
• Durability: Ensures the document remains effective even if the principal becomes incapacitated.
• Agent Selection: Chooses a trustworthy and capable individual as your initial Agent and one or more successor (backup) Agent(s) in order of desired succession in case the initial Agent fails or ceases to serve.
  • Usually, spouses serve as each other’s initial Agent.
  • You may also choose co-Agents as your initial Agent, where both co-Agents serve together, and/or you may choose co-Agents as successor agents. See section below entitled “Co-Fiduciary Designations and Authority” for more in-depth overview of co-Agent designations and co-Agent authority.

Last Will and Testament

A Last Will and Testament outlines how a person’s assets will be distributed upon their death, names guardians for minor children and pets, outlines burial instructions, and specifies an executor to manage the estate.

Considerations:

• Beneficiaries: Clearly name individuals or organizations to inherit assets.
• Guardianship: Designate guardians for minor children and pets.
• Executor: Select a responsible Executor to carry out the will’s provisions and one or more successor (backup) Executors in order of desired succession in case the initial Executor fails or ceases to serve.
  • Usually, spouses serve as each other’s initial Executor.
  • You may choose co-Executors as your initial Executor, where both serve in that fiduciary role together, and/or you may choose Successor (Backup) co-Executors if your initial Executor fails or ceases to serve. See section below entitled “Co-Fiduciary Designations and Authority” for more in-depth overview of co-Executor designations and co-Executor authority

Advance Medical Directive (Living Will/Healthcare Directive/Healthcare Power of Attorney)

An Advance Medical Directive details a person’s wishes regarding medical treatment and end-of-life care and appoints a Healthcare Agent to make decisions if the person is unable to do so.

Considerations:

• Treatment Preferences: Specify types of medical treatment and interventions desired or not desired, including but limited to:
  • Do-Not-Resuscitate (DNR) or Life-Sustaining Measures and related considerations
  • Organ Donation and related considerations
• Healthcare Agent: Designate a trusted individual to make medical decisions on your behalf as your initial Healthcare Agent and one or more successor (backup) Healthcare Agents in order of desired succession in case your initial Healthcare Agent fails or ceases to serve.
  • Usually, spouses serve as each other’s initial Healthcare Agent.
  • You may choose co-Agents as  your initial Healthcare Agent, where both co-Healthcare Agents serve together, and/or you may choose successor (backup) co-Healthcare Agents if your initial Healthcare Agent fails or ceases to serve. See section below entitled “Co-Fiduciary Designations and Authority” for more in-depth overview of co-Agent designations and co-Agent authority

Revocable Trust

A Revocable Trust allows the creator(s) (the “Grantor(s)”) to manage their assets during their lifetime and provides for an orderly transfer of assets upon death without the need for probate.

 Considerations:

• Flexibility: The Grantor can modify or revoke the trust at any time.
• Management: Chooses a reliable trustee to manage the trust’s assets. Usually, the Grantor(s) serves as initial Trustee(s) until their passing; and, if married, the remaining spouse usually serves as sole Trustee until his/her death, at which time a designated successor Trustee(s) or successor co-Trustees would serve.
• Beneficiaries: Clearly defines who will benefit from the trust and under what conditions.

Irrevocable Trust

An Irrevocable Trust transfers assets out of the Grantor’s estate, offering protection from estate taxes and creditors, particularly Medicaid, and provides specific benefits to beneficiaries.

Considerations:

• Permanence: Once created, the trust generally cannot be modified or revoked.
• Asset Protection: Shields assets from creditors and may provide tax advantages.
• Trustee Selection: Appoints a trustworthy and capable trustee to manage the trust, who cannot be the Grantor(s)

Co-Fiduciary Designations and Authority

When designating co-fiduciaries in estate planning documents, it’s vital to outline their roles and responsibilities clearly.

Considerations:

• Collaboration: Ensure co-fiduciaries can work together harmoniously.
• Authority: Specify whether co-fiduciaries: 1) have the independent authority to act; 2) are only able to act independently where an immediate decision must be made and all reasonable attempts to contact and confer with other co-fiduciary have been made; 3) are only able to act in concert with one another.
• Succession Planning: the use of co-fiduciaries provides a built-in succession plan in the event a fiduciary becomes unable to serve.

Preparing for Your Initial Consultation

To make the most of your initial estate planning consultation, consider the following steps:

1. Gather Information: Collect details about your assets, liabilities, and family dynamics.
2. Define Goals: Clarify your objectives for wealth distribution, healthcare decisions, long-term care, and asset management.
3. Choose Representatives: Think carefully about who you trust to act as your fiduciary (agent, executor, trustee), as well as successors.
4. Ask Questions: Prepare questions about any concerns or complexities you foresee.

We hope this guide has been helpful in preparing you for your consultation. There are many nuances to estate planning that are dependent on your unique circumstances; consequently, your attorney will approach your plan with the inclusion of documents and instructions that accomplish your personal goals and wishes.