Sometimes the law can be confusing, but it doesn't have to be. We've compiled some general estate planning Frequently Asked Questions to help you as you navigate your estate planning needs. Don't see your question listed? Please feel free to contact us with your question using our contact form.
General Estate Planning FAQs
What is estate planning?
Estate planning is a process that enables you to control and protect your estate while you are alive and well, and enables someone else to take care of you, and your loves ones, if you become unable to make decisions for yourself and at your death. A good estate plan allows you to give what you want, to whom you want, the way you want, at the time you want. With proper estate planning your loved ones can make decisions more quickly, avoid needless delays, prevent unnecessary expenses, and maintain privacy, if desired.
What is included in an estate?
Your “estate” consists of everything you own. This includes cash, savings, CD's, stocks, bonds, mutual funds, life insurance, retirement plans, homes, vehicles, boats, planes, investment and rental properties, businesses, jewelry, furniture, tools, antiques, or any other physical or digital assets you own or control.
What does it mean to die intestate?
Intestate refers to someone who has died without leaving a will or who has left a will that is determined to be invalid. When this happens, a probate court will determine how and when the person's assets are distributed, according to the state's intestacy laws. Often state laws may not make provisions for your loved ones or handle your assets in the way you would have chosen, so even when your wishes feel straightforward to you, we recommend making sure you have the proper legal documents in place to ensure your wishes are honored upon your death.
What is included in a Last Will & Testament?
This written directive of how you want your estate to be handled usually designates a personal representative or executor who will handle your affairs after your death, indicates who is to be the guardian of any minor children, identifies the beneficiaries who are to receive your assets, as well as numerous other matters.
What is a pour-over will?
A pour-over will is a specific last will and testament used with a trust-based estate plan. Upon your death, the pour-over will, which functions as a safety net, names your trust as the beneficiary of any probatable property the trust does not already hold. Non-probatable property—such as a retirement account, or life insurance policy, with beneficiary designations—passes directly to the beneficiary and not via the pour-over will.
What is the difference between a Pour-over Will and a Last Will & Testament?
A Pour-Over Will works in conjunction with a trust-based estate plan to ensure that any assets held in an individual's name at the time of death are transferred into the trust and managed by the trustee(s). A Last Will and Testament is a stand-alone document that names an executor and gives instructions for what will happen after your death.
What is a Trust?
There are many types of trusts, but in estate planning a trust is often a legal entity set up to manage assets on your behalf. Depending on the type of trust, the trust agreement will typically contain instructions for your own care and the care of your family if you become disabled, as well as for the distribution of your assets upon your death. A trust can allow you to keep your instructions and financial affairs private and ensures that your instructions are carried out efficiently without unnecessary judicial involvement.
What is a revocable living trust?
A revocable living trust (RLT) is a very flexible type of trust designed to allow the creator to amend or revoke the trust at any time. The trust agreement generally includes instructions for your own care and the care of your family if you become disabled, as well as the distribution of your assets upon your death. As part of a well-designed estate plan, an RLT should allow you and your loved ones to keep your instructions and financial affairs private and ensure that your instructions are carried out efficiently without unnecessary judicial involvement.
What is an irrevocable trust?
An irrevocable trust is a type of trust that cannot be modified or terminated without the permission of the beneficiary. With an irrevocable trust, the person who creates and funds the trust, known as a “grantor”, effectively removes all of his or her rights of ownership to the assets and the trust once they have transferred assets into the trust. The assets will then be controlled or managed by the named trustees. This type of trust can be an effective asset protection and tax planning tool.
What is a power of attorney?
A power of attorney (POA) is a legal document giving someone, commonly referred to as an agent or attorney-in-fact, authority to act for you (the “principal”) if you become incapacitated. This person is typically given the power to manage your assets and financial affairs. For instance, they will be authorized to transfer property to your trust, to make withdrawals from your bank account, or to do anything else that you want your agent to do for you if you become unable to act on your behalf. You may also hear this document referred to as a General Power of Attorney or a Financial Power of Attorney. A limited power of attorney can be created that only grant an attorney-in-fact powers for specific acts or particular purposes.
What is the difference between a durable power of attorney and a springing power of attorney?
When speaking of a power of attorney, durable and springing refer to the point in time that the power of attorney becomes active, or when the agent has legal ability to make decisions on behalf of the principal. A durable POA is effective the moment you, the principal, sign the document, while a springing POA is only “springs” into action when a specific event occurs, for example, if you become incapacitated.
What's the difference between my Health Care Power of Attorney and my General or Financial Power of Attorney?
While there is some overlap, health care and financial powers of attorney fulfill two distinct roles in an estate plan. Under your Health Care Power of Attorney, your health care agent, also referred to sometimes as health care power of attorney or health care proxy, is responsible for making medical decisions on your behalf and may also implement your pre-arranged instructions if you experience incapacity. Likewise, an attorney-in-fact under your Financial Power of Attorney can manage your money by paying bills, filing taxes, purchasing insurance, and adjusting investments for you if you become unable to do so yourself. You may choose to appoint the same person to both roles or you may select different people. It's up to you to decide who is best for each role.
What is a Health Care Power of Attorney?
Should you become unable to express your wishes or make decisions for yourself, your Healthcare Power of Attorney is a legal document designating someone (your “agent”) to make medical decisions on your behalf. This document will also allow your agent to obtain your medical records if needed. Some health care providers may still insist on a HIPAA Release, as well, so you do want to make sure these documents work in conjunction.
What is an Advance Health Care Directive?
The Advance Health Care Directive, often referred to as a Living Will, expresses your preferences for care if you become unable to make decisions for yourself. The AHCD works in tandem with your Health Care Power of Attorney, but anyone can deliver this document to your doctors if your HCPOA is unavailable to assist in making health care decisions for you. If you are someone who does not want extraordinary medical measures taken, especially those that would cause you pain or discomfort, if those measures would only prolong the dying process, the AHCD is a document that you will want to make sure is a part of your estate plan.
What is a Living Will?
A Living Will, also known as an Advanced Health Care Directive, expresses your preferences for care if you become unable to make decisions for yourself. The Living Will works in tandem with your Health Care Power of Attorney, but anyone can deliver this document to your doctors if your Health Care POA is unavailable to assist in making health care decisions for you. If you are someone who does not want extraordinary medical measures taken, especially those that would cause you pain or discomfort, if those measures would only prolong the dying process, the Living Will a document that you will want to make sure is a part of your estate plan.
What is an Authorization for Release of Protected Health Information?
An Authorization of Release of Protected Health Information, or a HIPAA Release, is a document required by the Health Insurance Portability and Accountability Act (HIPAA) to allow the persons you designate to obtain protected health information on your behalf. Having this document in place will help these individuals make informed decisions about your care and to pay your medical bills.
What is a POLST Form?
A POLST Form is short for Physician Order for Life-Sustaining Treatment Form. It is similar to the Living Will or Advance Health Care Directive, but indicates specific medical treatments you want during a medical emergency. POLST forms are commonly included in estate plans for individuals with a serious illness or advanced frailty near the end-of-life.
I would like to change my Health Care Power of Attorney – what do I do?
This is a change that may be done at any time. You will begin by revoking your Healthcare Power of Attorney by informing your agent (the person currently designated as your HCPOA), in writing, that you are revoking the appointment. You will also need to send a copy of the written revocation to anyone who has a copy of the original Healthcare Power of Attorney document. To designate a new Healthcare Power of Attorney, we recommend contacting our office.
What is probate?
Probate is the court-supervised process of distributing a deceased person's money and property, a process which is sometimes necessary after someone passes away. Probate gives someone—often the surviving spouse, a close family member, or trusted friend—the legal authority to gather the deceased person's assets, pay debts and taxes, and eventually transfer assets to the people who inherit them. Depending on the context, the person carrying out these responsibilities is usually called the “personal representative,” “executor,” or “administrator.” If there is a last will and testament, the probate court will need to verify that the will is valid before it is admitted to probate. If there is not a will, the deceased person is said to have died “intestate” and the decedent's assets will be distributed according to state law.
I already have (or I'm getting) life insurance to care for my family. Why do I need a will or trust too?
If you don't have a will, the court will decide who settles your estate and raises your children and Tennessee state law determines who gets your assets - and it may not be who you think. Most people prefer having an estate plan in place that includes a will or trust that allows them to make those decisions themselves.
Further, life insurance may furnish the money to provide for your family if you're not able to, but the policy doesn't offer any structure, guidance, or protection against waste or financial abuse. If you only use a “plain” beneficiary designation, you lose the ability to arrange this protection for you family. A comprehensive estate plan, however, gives you the opportunity to implement safeguards against mismanagement. Life insurance can be a very helpful component of estate planning, but it needs to be implemented properly.
Can I include instructions for my memorial service in my estate plan?
Absolutely! We encourage our clients to do so. During a period of incapacity or in the event of your death, your loved ones are often not able to think clearly and some decisions must be made within hours of death. Making your wishes known in writing through your estate plan will provide important information to your family and loved ones to help them in that process.
What do I include for the memorial instructions in my estate plan?
Your memorial instructions document is a good place to include your burial or cremation wishes and a description of the kind of memorial service you would like. You may also want to express your feelings about the general amounts that should be spent for these remembrances. Or you may have made pre-arrangements that should be described. Our clients are provided with forms to help guide you in recording this information, but you can also communicate through a personal memorial letter. Whichever you choose, we encourage you to consider including the following information: religious affiliations, pre-purchased plans, desire for private service or service for friends and relatives, pall bearers, viewing wishes (open or closed casket), scripture readings, music selections, etc.
Should I tell my estate planner I'm expecting an inheritance?
Yes. While some people are hesitant to count their chickens before they hatch, bringing your estate planner into your full financial picture is the best way to prepare for whatever the future may hold. By planning ahead, you can help ensure that whatever is left to you will be protected and able to be enjoyed for years to come. With all of the emotions that surround the passing of a loved one, you'll be able to focus on grieving and the administration process, without having the additional worries of how you will handle your finances.
My spouse just died. What estate planning concerns do I need to address?
You and your spouse probably owned some, if not all, of your accounts and property jointly. This may have been because you acquired the money and property during your marriage or because by owning the accounts or property jointly with rights of survivorship, you could avoid the probate process at the death of the first spouse. While you were able to avoid probate at the death of your spouse, you now own the accounts and property individually, and they will now be subject to probate at your death if you do not do any further estate planning. If avoiding probate is a priority for you, we can meet to discuss the various options available to you.
You will also want to review the beneficiary designations on your life insurance and retirement accounts. Most married individuals automatically list their spouse as the beneficiary because the intent is for the money to be used to continue the spouse's current lifestyle. When considering other beneficiaries, the decision can be a little more complicated, which is why people sometimes avoid listing a contingent (backup) beneficiary. However, now that your spouse has passed away, you will need to confirm who is listed as the primary beneficiary and make sure that a contingent beneficiary is listed. We can help you walk through your options for leaving these accounts to other individuals and advise as to how they should be left.
Lastly, review your selections for your trusted decision-makers. Because of the close relationship you shared with your spouse, you likely named your spouse to serve in one or all of the following roles:
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- personal representative under your Last Will and Testament
- co-trustee or successor trustee of your RLT
- agent under your Financial Power of Attorney
- agent under your Health Care Power of Attorney
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Because your spouse is now deceased, you should review these documents and your selections to ensure that you have named a backup. You may also want to consider naming a backup for your backup.
If you have minor children, you will also need to consider who should serve as your children's guardian if you are unable to care for them. If your spouse was the other legal parent, it is incredibly important that you name a guardian because your automatic backup is no longer alive.
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Read More:
What is Estate Planning? An Estate Planning Overview
Estate Planning Basics & Benefits
Wills Versus Trusts: How do I know What I Need?
