All comprehensive estate plans include three essential documents:
- a last will,
- a financial power of attorney, and
- an advance health care directive
Together, these documents detail your instructions for what should happen if you pass away or if you become temporarily or permanently unable to manage your own affairs.
What is a Last Will?
A last will and testament is the first document most people think of when they think of an estate plan.
Your last will is the core document of your plan, and it details your wishes for what happens after you pass. You’ll specify who receives your assets, who looks after your children, and any requests for your body’s final resting place or end-of-life ceremonies.
If you create a revocable living trust or other trust plan, your trust works as a “will substitute” capable of managing distributions of your assets to your loved ones. Instead of a traditional will, you’ll create a pour over will that funds your trust with leftover assets for distribution under the trust agreement. Similar to a traditional will, pour over wills can also name guardians for minor or special needs children and include instructions for your body’s final resting place and any desired end-of-life ceremonies.
What is a Financial Power of Attorney?
A financial power of attorney gives another person, known as your agent or attorney-in-fact, the ability to act on your behalf in certain financial situations.
While you may not have realized it, if you’ve ever completed your taxes online or through an accountant, you likely granted a limited financial power of attorney to TurboTax, HR Block, or your accountant to file your taxes and represent you to the IRS.
A typical financial power of attorney goes a few steps further. It can grant your agent the ability to act on your behalf not just on tax matters but also in other common subjects including real estate, family financial care, business operations, investments, and other financial transactions.
Granting these powers to a trusted individual can be helpful under ordinary circumstances, and all the more so if you temporarily or permanently lose the ability to make or communicate your decisions.
Rather than the government appointing someone to manage your affairs, you can preemptively make your own designation, should the need arise.
What is an Advance Health Care Directive?
An advance health care directive sets out your advance instructions for certain medical treatment if you should ever become unable to communicate those instructions directly. An advance health care directive may include any combination of a living will, medical power of attorney, and HIPAA Release.
- Living Wills: a living will specifies your preferences for treatment you would like to receive in certain medical situations. You can note, for example, whether you would like to receive hydration or nutrition through artificial means (colloquially, ‘tube feeding’) if you are unconscious and your doctors believe you are unlikely to regain consciousness
- Medical Power of Attorney: a medical power of attorney or power of attorney for health care is a means through which you can designate a trusted individual to make medical decisions on your behalf if you are unable to make or communicate them yourself. Since it’s impossible to predict and provide instructions for every conceivable situation in a living will, granting a medical power of attorney to a trusted individual who knows you and your values well may be the best way to ensure your healthcare wishes are followed
- HIPAA Release: under the Health Insurance Portability and Accountability Act (HIPAA), your health information is private and cannot be shared with most other individuals. A HIPAA Release names a person or people with whom you permit sharing your private health information. This authorization is helpful to keep close family members, friends, and unmarried partners in the loop about your care
How to Create Your Essential Estate Plan Package
You can create your essential estate plan package with a last will and testament, durable financial power of attorney, and advance health care directive in a couple different ways.
Many people choose to create their plan with an attorney, which typically costs $500-1,500+ depending on where you live.
The more convenient and affordable way is to make your estate plan online. With Just In Case Estates, you can create a legally valid, state-specific last will in as little as 10 minutes and for a fraction of the price of an attorney-prepared will –– all from the comfort of your home.
Check out our estate plan comparison tool to see which plan best meets your needs, and get started today for free.