Four Documents You Need for a Cohesive Estate Plan

By Ashley N. Garvey, Attorney
Noland, Hamerly, Etienne & Hoss

                                  As Published in the Salinas Valley Business Journal, May 2021

So, what is an estate plan and why do you need one?  An estate plan is more than a simple will that provides for the distribution of your assets at your death—it is a collection of documents that work together to ensure you and your assets are well-managed in the event you die or lose capacity.  It is comprised mainly of four documents: (1) the living trust; (2) the pour-over will; (3) the durable power of attorney; and (4) the advance health care directive/power of attorney for health care decisions, each of which serves a distinct, yet interrelated purpose. 

1.    The Living Trust.
  
The living trust is the centerpiece of an estate plan.  It contains provisions covering the administration and management of your assets while you are alive, along with provisions for the disposition of your assets on your death (for assets placed in the trust).  While you are alive and competent, the living trust remains completely revocable. It can be amended at any time, so while you are alive and competent, you retain complete control over your living trust and the assets inside it.  
The living trust provides four main benefits: (1) it creates a succession plan for who will manage your assets in the event you die or become incapacitated; (2) it governs how your assets will be distributed at your death; (3) it provides, if necessary, for the creation of separate trusts for minors or other young beneficiaries who may not be able to handle a large inheritance; and (4) it allows you to avoid the time and expense of probate, so long as your assets are properly titled.  

2.    The “Pour-Over" Will.  

The will used in a complete estate plan is a special kind of will known as a “pour-over” will.  A “pour-over” will operates to transfer, or "pour over," into the trust any assets that are not titled in your living trust when you die.  Once the assets are in the trust, the trustee then distributes them according to the distributive provisions of your living trust.  

3.    The Durable Power of Attorney for Management of Property and Personal Affairs.  

Your Durable General Power of Attorney is another essential part of your estate plan.  It is particularly useful in that it allows your attorneys-in-fact to deal with the property outside of the living trust.  Your attorneys-in-fact can use your Durable General Power of Attorney to fund your living trust and ensure your property is placed in the trust. This is extremely important because without it, avoiding probate may be impossible.

4.    The Advance Health Care Directive/Power of Attorney for Health Care Decisions.  

The living trust, “pour-over” will, and durable power of attorney ensure your financial assets are taken care of, but what about your health care decisions?  The Advance Health Care Directive/Power of Attorney for Health Care Decisions ("AHCD/PAHC") allows you to appoint an agent to make health care-related decisions for you in the event you are incapacitated.  It also allows you to specify your desires for treatment or withdrawal of care if you are in a terminal condition, and to choose if you would like to donate your organs or body at your death. 

Creating a cohesive estate plan is one of the most important steps you can take to ensure you and your assets are taken care of, not only when you die, but during your life as well, and these four documents are the perfect place to start. 

This article is intended to address topics of general interest and should not be construed as legal advice.
© 2021 Noland, Hamerly, Etienne & Hoss