Five Essential Ohio Estate Planning Documents
November 4th, 2019
You have no doubt heard and read a lot about the importance of having an estate plan. It is true that every adult (even young adults) needs an estate plan. But what exactly makes up an estate plan? Are there documents you must have, and those you can get away without? It is easier to understand what you need if you know what the various tools in the estate planning toolkit are. Spoiler alert: the estate plan you need is much more than just a last will and testament. Here are the essential Ohio estate planning documents.
Essential #1: Last Will and Testament
When you think of an estate plan, you probably think of making a will. This is because a will is one of the basic building blocks of an estate plan. A will allows you to dictate who will receive your property when you die; without a will or other estate planning tools, the State of Ohio makes that determination. A will also allows you to appoint a guardian for your children if they are minors at your death.
People often think about wills in terms of leaving their larger assets to loved ones, but one of the most useful things about a will is its ability to leave smaller items, perhaps those without much financial value but with great sentimental value, to specific people. This can prevent fighting among your heirs after your death over cherished family heirlooms. Preventing conflict among family members is one of the most important things your estate plan will do.
Essential #2: Living Trust
Like a last will and testament, a living trust can dispose of your assets at your death. But there are things a living trust can do that a will cannot. A will’s terms take effect only when you die. But what many people don’t realize is that they may need their estate plan in place while they are still alive.
A living trust allows you to use and enjoy your assets while you are alive and able to manage your own affairs. But if you become incapacitated, such as by dementia or an accident, a living trust lets you dictate how your assets will be managed during your lifetime and designate a successor trustee to manage them.
A living trust, unlike a will, allows you to avoid probate upon your death, which means your assets pass more seamlessly to those you intend to have them. A living trust can also let you dictate how and when your heirs receive their inheritance. Depending on its terms, your will may also offer tax benefits and offer asset protection for your heirs from creditors, bankruptcy, and divorce.
Wills and trusts can accomplish many of the same goals, but each does some things the other cannot, so it is important to have both.
Essential #3: Durable Financial Power of Attorney
If you can no longer take care of your business and financial affairs, who will take care of them for you? Don’t assume that your spouse or adult children can; in most cases, that is simply not true. A successor trustee can manage your trust assets, but as far as your other financial and business matters go, you need a durable financial power of attorney. A power of attorney grants another person you choose to conduct business (like paying bills, entering contracts, opening and closing accounts) on your behalf. “Durable” means that this power survives after you become legally incapacitated.
Don’t assume you’ll be able to see incapacity coming and appoint someone “when the time is right.” A sudden illness, like stroke, or an accident can render you suddenly legally incapacitated. And people tend to be in denial about the onset of dementia. By the time it’s obvious you can no longer manage your own affairs, you may no longer be legally capable of appointing an agent under a power of attorney to manage them for you. Your family will be forced to go to court and essentially sue you for the right to take care of your business.
Essential #4: Healthcare Power of Attorney
A medical or healthcare power of attorney specifies who can make decisions on your behalf in the event that you cannot make them for yourself. This person, called your healthcare agent or attorney-in-fact, should be someone you trust to act in your best interests and in accordance with your values. You can give your healthcare agent specific guidance as to what treatments you would or would not want to receive via a Living Will Declaration, or grant them the authority to act as they think best.
Essential #5: HIPAA Release Form
“HIPAA” stands for the Health Insurance Portability and Accountability Act of 1996. Part of this law is intended to protect the privacy of your medical information. This is a good thing, but in order for people you care about (other than your healthcare agent) to have access to your medical information, you must grant access to your records through HIPAA releases.
As you can see, most of these essentials have little to do with how much money you have, or whether you are responsible for providing for others. Estate planning is important for all adults, and, as you can see, estate planning is about much more than what happens after you die.
Of course, if you do have significant assets, there are other estate planning documents you should have in your “toolkit.” If you have questions about estate planning, or need to create or update your estate plan, contact Gudorf Law Group to schedule a consultation.