Having An Estate Plan Is Not Exclusive To The Very Wealthy

Many people think that creating an estate plan, is an extremely complicated procedure that only the very wealthy need, nothing could be further from the truth!

This is true because an estate plan considers you as a person, not just your wealth. 

Some key things a well written estate plan takes into consideration are things like;

• guardianship/custody issues (if you have young children),
• who would take care of your pet if you are no longer here, or if you no longer can due to disability,
• who will make medical and/or financial decsions for you if you are incapacitated
• disposition of your material possessions, and when they will be transfered to your beneficiaries.

Four Absoultely Necessary Documents You Need To Have

Any well designed Estate Plan, needs to have

• Will
• Medical Proxy
• Durable Power of Attorney
• HIPPA Release Authorization Form

Additionally, you may want to include a Trust in your Estate Plan as well

Will

Everyone is familiar with this estate planning document, but the fact is less than 1/2 of Americans actually have taken the time to have actually created a will. Wills are governed by Massachusetts General Laws c. 191

When a person passes away their estate is handled in one of two ways:

• if the person dies without a will, the law calls this being Intestate. If the deceased is intestate, an administrator/administratrix is a person appointed by the Family and Probate Court and charged with the administration of the Deceased's estate according to the laws of distribution of the Commonwealth of Massachusetts. Distribution is made according the heirs being the closest related relatives to the deceased (consanguinity).
  
• if the person dies with a will, the law calls this dying Testate. The administraion of your estate is handled in Probate court by an Executor/Executrix who you, not the Court,  have appointed to manage your estate. The advantage of having a legally valid executed will in place allows you to decide where, when, and how your personal belongings will be distributed after you are no longer here. Of equal (or more) importance is that you get to decide who will take care of your children (if any), and pets, by designating these things in your will. Another advantage of having a will in place is that you can create an "ethical will".
  
  Ethical wills are a way to share your values, blessings, life's lessons, hopes and dreams for the future, love, and forgiveness with your family, friends, and community.
  
  Ethical wills are not new. The Hebrew Bible first described ethical wills 3000 years ago (Genesis Ch. 49). References to this tradition are also found in the Christian Bible (John Ch. 15-18) and in other cultures. Initially, ethical wills were transmitted orally. Over time, they evolved into written documents. 'Ethical wills' are not considered legal documents as compared to 'living wills' and your 'last will and testament' which are legal documents.
  
  Today, ethical wills are being written by people at turning points and transitions in their lives and when facing challenging life situations. They are usually shared with family and community while the writer is still alive.
  
  Ethical wills may be one of the most cherished and meaningful gifts you can leave to your family and community, because you reveal your inner essense and thought processes at a certain age, so that your children and community will know what your exact thoughts were at that time in your life. These can be updated as necessary, and can be the greast gift that you provide your loved ones. 

Medical Proxy

Many people when planning there estate, only plan for what will happen ifthey pass away, they failto plan for the possibility that they may still be here, but not be able to act in their own behalf. Health Care Proxies are governed by Massachusetts General Laws c.201D

A Medical Proxy (Medical Power of Attorney) is a document that allows someone to make medical decisons for you when you can't. The advent of the Health Insurance Portability and Accountability Act (HIPPA) had the uninteded effect of making this process somewhat more complicated. Please see this U.S. Department of Health and Human Services Memo on the effect of HIPPA on Personal Representatives [45 CFR 164.502(g)].

HIPPA restricts medical providers from providing personal medical information, and while in most cases this issue may not come up during the use of a medical proxy, it is wise to have a HIPPA release language incorporated with in the Medical Proxy, and also to have an actual HIPPA Authorization form attached on a seperate page. An example of a HIPPA Authorization Release Form can be seen from the Toledo Ohio Bar Association here http://toledobar.org/files/public/HIPAA_form.pdf

Unfortunately, many Health Care Proxies that were executed years ago, have yet to be updated to include the HIPPA Authorization language and form, and therefore may currently be ineffective. You should review the language in your Health Care Proxy to make sure it is still a valid document.

Durable Power of Attorney

Power of Attorney is governed by Massachusetts General Laws c.201B

Once again, if you are unable to handle your own financial affairs, you need to designate someone to do this for you. APower of Attorney can be executed for a specific purpose or time frame, but these become ineffective once the person is not able to make their own decisions. The Durable Power of Attorney remains in effect until the person making it out withdraws it. Some Power of Attorney documents are what is known as "springing", that is they "spring" into effect once the person loses the legal capacity to act in their own behalf. This determination may necessarily involve having a medical provider provide HIPPA protected medical information. Therefore either the Durable Power of Attorney should also include a HIPPA Relaease Authorization form, or not be of the "sprining variety

You can avoid that costly court process by the use of this very powerful tool: the "durable power of attorney". This power is inexpensive and easy to execute. The benefits are obvious:

- your wishes are carried out exactly as you want them
- you can decide who will make your decisions for you
- it can be effective immediately or upon your subsequent disability
- it is a flexible document: you can delegate as much or as little authority as you desire
- it is inexpensive
- the Probate Court process will not be necessary.

The way the durable power of attorney works is simple: You continue to retain full control over your affairs unless and until such incapacity occurs. If it does, the person you have appointed will take over your affairs and act within the specific guidelines you have already established.

Massachusetts General Laws c.201B creates two types of durable power of attorney in Massachusetts:

1. A "present" durable power of attorney in which the power is immediately transferred to your attorney in fact or:

2. A "springing" or future durable power of attorney that only comes into effect upon your subsequent disability as determined by your doctor.

The person who carries out your wishes is called "attorney in fact". Normally this would be your spouse or another trusted family member or friend. Your attorney in fact can pay bills, deposit checks, handle taxes, sell stocks, invest in securities and do all things that you normally would do. You can revoke this power at any time as long as you're competent.

In other words, flexibility, privacy, independence, cost control, certainty, convenience and piece of mind our all achieved by the use of this important estate planning tool.

Trust

An agreement under which one person (Settlor) transfers title to specific property (Corpus) to another (Trustee) who agrees to hold or manage it for the benefit of a third person (Beneficiary). An equitable right, title or interest in property, real or personal, distinct from its legal ownership.  

A trust can be used to make sure money left for a child is held until that child attains a specific age, or that the property of the trust will only be given if certain circumstances are met, or for many other reasons, but a Trust should be considered in any well thought out Estate plan.

When combined, a health care proxy, properly drafted Massachusetts Will, and the durable power of attorney, creates a formidable and affordable estate planning package for small to moderate sized estates.

If you have questions regarding any of the above documents, please contact me for more information,