Estate Planning Documents
Estate planning documents comprise a set of documents that manages your affairs in the event of disability or incapacity and after your death. In Texas, they include a Last Will & Testament, Durable Power of Attorney, Medical Power of Attorney, Directive to Physicians, Living Trust, and Transfer on Death Deed, among other documents.
Last Will and Testament
The Last Will and Testament is a document that tells the world, and, more specifically, the court, how you would like your estate distributed. Even if the will is never used, it is important that everybody has a will because it helps transfer legal title to those assets that are not distributed otherwise.
The testator of a will is the deceased. The executor is who the testator nominates to manage his/her estate after death. The executor, if needed, will probate the will by filing it in the Probate Court, attend hearings at the Probate Court, create an inventory and appraisal of the estate, and manage/distribute the estate assets in the manner described in the will.
Of course, probate can be a costly and lengthy process. Therefore, attorneys do their best to assist clients to manage their estates outside the probate court. There are several ways to accomplish this goal. First, most people die with house, a bank account, some stock accounts and retirement accounts, vehicles, and personal effects. Attorneys can use the transfer on death deed to take care of the house, and advise the client to name beneficiaries for all the financial accounts. Then, the vehicles can be transferred by an affidavit.
Transfer on Death Deed
The transfer on death deed is, well, what it sounds like. It is a deed that transfers ownership in real property to the person you name upon your death. The deed is filed at the time of signing, but legal transfer does not occur until after (i) the grantor’s death; and (ii) the filing of the death certificate with the deed records in the county in which the real estate was located. However, transfer on death deeds require special language, and the distributions must be equal.
Revocable Living Trust
A revocable living trust is another way to avoid probate. In addition to avoiding probate, living trusts can be used as a better tool to both manage taxes and manage the conditions upon which a transfer to a beneficiary takes place. For example, although one can place age restrictions in a will, they make more sense in a trust so that it is managed outside the purview of the court. Other conditions can also be imposed, such as life benchmarks, although those are often ill-advised depending upon the situation.
Durable Power of Attorney
A durable power of attorney is a document where a principal gives authority to another person to act in his/her stead. Usually, attorneys draft “springing” durable powers of attorney so that the power of attorney does not become effective until the principal is incapacitated or disabled.
The principal of a Texas durable power of attorney can limit or grant any power that s/he desires. In addition, the principal can allow the agent to make gifts to certain individuals or take steps that would allow the principal to qualify for public long-term assistance.
Medical Power of Attorney
A medical durable power of attorney is what it sounds like. A principal appoints agent(s) to make healthcare decisions on his/her behalf if the principal is unable to make those decisions herself. It is important to note that the medical power of attorney is not merely an end-of-life document. It can apply in a number of situations, such as coming out of surgery.
Directive to Physicians
The directive to physicians is often called a living will in Texas. This is the document in which the principal tells his doctors, family, and friends how s/he wants to die. The directive to physicians covers two types of conditions, the terminal condition and the irreversible condition. A terminal condition is a condition that will cause death within six months. An irreversible condition is a condition that will cause death, but the amount of time could be longer, sometimes much longer.
The principal has two choices. First, s/he can choose to be allowed to pass naturally, but otherwise be maintained in comfort. Or, s/he can choose to be kept alive at all cost. And, the decision can be different for the two types of conditions. In addition, the principal can provide other palliative care instructions.
Of course, there are several other estate planning documents that could be utilized depending upon the facts of the client and his/her personal situation. However, these are the documents that are used most often.
Contact an attorney to start your estate planning.
* Robert Newton is an attorney based in Frisco, Texas, that practices estate planning, real estate law, and business law.