The Three Estate Planning Documents You Need

In previous posts, we have discussed various estate planning documents and how they differ, but many times there is confusion as to what takes effect and when. Or, you may wonder why you can’t just appoint an agent (power of attorney) in your Will.  I have provided a simple review of each document, its purpose, and when it takes effect in hope that I can quickly dispel the confusion.

Generally, when clients meet with me for estate planning, three documents are prepared and executed: the Financial Power of Attorney, the Durable Health Care Power of Attorney/Advanced Health Care Directive, and the Will. 

The Financial Power of Attorney allows your agent to access your financial accounts, pay bills and make transfers on your behalf immediately upon signing.  It is important to select someone you trust as they have access to all of your financial accounts.  There are ways to protect yourself and ensure that the agent you have appointed is acting in your best interests.  One way is to appoint co-agents so they act as a check on each other.  However, this can lead to disagreements between the agents and defeat the purpose of the document itself.  Another way is to request an accounting of your agent’s activity if you suspect something is amiss.  The agent is bound to follow certain fiduciary duties while acting as your agent.  If your agent fails to act in your best interest, they can be brought before the court and made to remedy their actions.  However, the best way to be proactive is to appoint someone that you trust implicitly from the beginning. 

The next document is the Durable Health Care Power of Attorney/Advanced Health Care Directive.  This document has some real flexibility in order to best suit your needs. It can simply appoint an agent or detail all of your wishes. It can give guidance as to your wishes or it can clearly lay out your instructions that your agent must follow. I often hear that people are afraid to sign one of these documents because they are concerned that if they do, the doctors will not resuscitate them should something happen. The two most important things to remember are (1) this document doesn’t take effect until you are unable to communicate, and (2) the Advanced Health Care Directive only applies in cases where it is an end stage condition with no hope of recovery or meaningful life.  This means if you are otherwise a healthy person who stops breathing, and you have signed an Advanced Health Care Directive, they will still resuscitate you; however, if you are at Stage 4 liver cancer with only days to live and you are unable to eat and unable to communicate your wishes, they will look towards your Advanced Health Care Directive to determine your wishes or instructions and discuss with your agent as to how to best proceed.

Finally, the Will.  This document will not take effect until you are deceased, so any directions you put in it do not matter until you die. It will, however, allow you to dispose of your estate in the manner you wish and to appoint a guardian for any minor children. This is why you need three separate documents.  These three separate documents can be developed in a way to meet your specific needs, and can be revised at different times in your life to adapt as your needs change.

Meeting with an attorney can provide a better understanding of each of the documents and help you more thoroughly assess your needs and desires with respect to proper estate planning. 

Lindsay Schoeneberger is an attorney at Russell, Krafft and Gruber, LLP in Lancaster, Pennsylvania. She received her law degree from Widener University School of Law and practices in a variety of areas, including Estate Planning.