Why Do I Need Estate Planning Documents if I Don’t Have An Estate?

Why Do I Need Estate Planning Documents if I Don’t Have An Estate?

By Tiffany S Wright – Davidge & Wright, L.P.

The title of this article represents one variation of what I often hear when listening to people talk about wills. People hear the word “estate” and immediately their minds shift to multi-million dollar houses, personal jets and the “caviar and champagne set.” But even if you aren’t in the category of people whose decisions involve which luxury car to purchase next, or where to buy that third vacation home, you still must take time for estate planning. Every adult has an estate—whether large, small, or somewhere in the middle. And every adult should make plans for dealing with that estate should he or she become unable during life, and for passing on his or her estate after death.

Often, people are under the mistaken assumption that the easiest and least expensive way to handle estate planning is to do nothing at all. These people don’t realize that many times, by doing no planning, they are substantially increasing the costs in money, time and frustrations that their loved ones will face—both during their lives and after their deaths. The Texas Probate Code sets out an “estate plan” for everyone who fails to plan for themselves and that plan oftentimes is not at all desirable. Most people would prefer knowing that their important healthcare and business decisions will be carried out by someone they choose and trust during their lives and, after they die their assets will be distributed with minimal cost by and to those they choose.

Many attorneys will provide a complete estate planning package for a reasonable flat fee where the client’s distribution desires are fairly straightforward and assets are not extensive (i.e. not valued high enough to warrant tax planning trusts or other types of tax planning such as lifetime gifting, both of which necessitate a more extensive planning process and more complicated document drafting).

Additionally, most attorneys who handle estate planning do not prepare only a Last Will and Testament and label that one document an “estate plan”. At a minimum, a package generally should also include powers of attorney for general business and financial matters, powers of attorney for medical matters, a directive to physicians and for those with minor children, and a document appointing a guardian for them. These documents are necessary for everyone—regardless of the size of their estate or the way their assets are titled.

A general durable power of attorney will give your appointed “attorney in fact” the power to deal with your business and financial matters in the event that you are unable to handle those matters either temporarily or on a long-term basis. Unless it specifically states that it is effective only upon your disability, the general durable power of attorney is valid immediately upon signing and remains valid until you die or revoke it in writing. While your attorney in fact is under a duty to act in your best interests, a duty of trust document gives him or her extensive powers, so you need to give the decision careful thought. You may even decide that your attorney in fact should be a trusted friend rather than an adult child in some situations.

A medical power of attorney will give your appointee the power to make medical decisions for you—again either temporarily or on a long-term basis—when you are unable to make those decisions on your own. Like the general power of attorney, the medical power of attorney is a broad grant of power to your appointed attorney in fact (often called a “healthcare agent”). This person does not have to be the same person as your general attorney in fact. Many times you will have certain family members or friends better suited for making medical decisions and others for business decisions.

Your directive to physicians is a document that directs your doctors to keep you comfortable, but not provide life-prolonging measures if you are diagnosed with a terminal or irreversible condition and you are unable to make your own decisions. Your healthcare agent will not be able to override your decisions set forth in the directive to physicians.

Now you may have a better idea of what constitutes an “estate plan.” It is not only a plan for what happens when you are gone, but a plan to make your life, and the lives of those who care for you, run smoothly when the need arises.