THE COMPONENTS OF THE BASIC ESTATE PLAN

by Kevin G. Harvey February, 2012

A large oak tree that stood beside a county road in Hancock County, Indiana, fell over on January 2, 2002, just as a family of five drove by in their vehicle. Four of the five family members were killed by the impact, including a 47-year-old man, his 39-year-old wife, their 10-year-old son, and their 6-year-old-daughter. The sole survivor was a 4-year-old daughter. Because the parents died without last wills and testaments, a judge was left to decide who, among several petitioning relatives, should be the guardian of the surviving little girl.

While we are healthy, we have a tendency to put off creating an estate plan for our family because incapacity and death seem like a remote event. While the statistical chances of death by falling tree are pretty low, the above true story illustrates the point that none of us are in fact guaranteed tomorrow. One of the most important gifts a person can give to his or her family is to implement an estate plan to predetermine the outcomes of issues such as guardianship of minor children and the use of assets for the support of family members in the event of unexpected death.

An estate plan consists of the multiple documents that are designed to effectively implement a person's plans for the possibility of incapacity and the eventuality of death. The particular documents that should be included as components of a person's estate plan should be carefully selected and designed taking age, health status, family status, asset status, planning goals, and relationship to beneficiaries into account. Every estate plan should be uniquely designed to meet the specific needs of the person implementing the plan.

While every estate plan should be uniquely designed, most basic estate plans will include the following documents at a minimum, described here in only brief summation:

  • A Last Will and Testament. With a last will and testament, a person nominates the person(s) who will administer his or her estate, sets forth the instructions for distribution of assets in the event of death, and nominates a guardian for any minor children.
  • A Durable Power of Attorney. A durable power of attorney is used to empower another person to manage your estate (real estate, vehicles, accounts, investments, etc.) during any period of physical or mental incapacity.
  • Appointment of a Health Care Representative. Use of this document allows a person to designate the person(s) who will make health care decisions for him or her during any period of physical or mental incapacity.
  • Living Will. A living will allows you to make decisions about how you wish for life support to be used (or not used) in the event you are in a terminal condition and your treating physician certifies, in writing, that the use of life support will only artificially delay your dying process. (The opposite of a living will is the life prolonging procedures declaration).
  • Declaration of Standby Guardian. A relatively new law in Indiana allows parents of minor children to designate a person to serve as a "standby guardian" in the event of incapacity or death of the parent. This document serves to span the gap that usually exists between the time of incapacity or death and the time that a court conducts a hearing on the issue of whom should be appointed as guardian.

If you do not have an estate plan in place, there is no better time than now to complete this process. We have attorneys in our firm who regularly create uniquely designed estate plans for clients and who would be happy to assist you.