The Roots of Estate Planning

Many people assume estate planning documents are strictly financial in nature. In reality, having such documents in place also expresses an individual’s personal instructions regarding health care preferences, family care and cherished belongings.

Properly prepared estate planning documents provide value beyond the possible reduction in estate taxes. The following four areas are part of the estate planning process:

Power of attorney

The power of attorney document provides the transfer of decision-making authority to a selected person in the event an individual is unable to make decisions related to his or her assets. This is significant for an individual who becomes incapacitated. The appointed person would administer financial obligations in accordance with the individual’s clearly stated goals and objectives.

Health care directives

Health care directives include comprehensive care instructions and the selection of appointed decision makers. These directives represent the personal decisions of an individual regarding acceptable treatments, quality of life, and specific instructions for doctors, family and friends.

Guardian designation

Estate planning documents can include language for naming guardians for minor children in the event of an untimely death of both parents. The decision to select a guardian is complex. The guardian and home environment selected should be appropriate for the minor child but also must be acceptable to both parents.

Memo regarding personal effects

Assets that have significant sentimental value should be transferred in writing either as a specific bequest in a will, trust document or a memo regarding personal effects. Common examples include jewelry, furniture or artwork. By designating transfer, the author of the memo controls division of these assets and potentially prevents conflict among family members.