As a long time student I celebrate two new year’s each year, the first day of school and January 1. The beginning of a new school year is a good time to take a look at your estate plan to make sure it is up to date. Less than half of Americans actually have estate planning documents in place and many others have outdated documents. Estate planning is not a once and done exercise. Documents created when your children were born likely need updating because your family and financial situation have changed. I encourage my clients to sit down with me at least every five years.

Estate planning is about five essential documents:

1. The Durable Power of Attorney
The most important estate planning instrument during life, I believe, is the durable power of attorney. This document appoints one or more people to handle your finances and legal matters in the event of your incapacity, whether through illness or injury, and whether the incapacity is temporary or permanent. In the absence of a durable power of attorney, family members often must resort to going to court to be appointed guardian. When you fail to appoint the person you want to take control, unnecessary legal fees and infighting by family members is often the result.
The devil, as always, is in the details of the power of attorney. You have to make decisions about how many agents to appoint, who to name as alternates, whether to allow gifting, when the power of attorney should take effect, and whether gift can be made to your power of attorney. Medicaid planning if often difficult, if not impossible, unless a power of attorney contains the necessary gifting language.

2. Health Care Proxy
Like the durable power of attorney, a health care power of attorney names the person to make health care decisions when and if you become incapacitated. Unlike a durable power of attorney, a Rhode Island health care power only takes effect when a doctor determines that you are unable to make decisions yourself. You can and should name one or more alternates to the principal agent.

The charge of the health care agent is to make a decision the patient would make in a particular circumstance. For this reason, the health care agent must understand their role and discuss with the principal their wishes for medical care and end of life planning. In Rhode Island, the health care power of attorney includes living will language stating whether you wish that invasive devices be removed when/if you are in a vegetative state or irreversible coma. The power also often states whether you wish for pain medication to be freely administered even if it may have negative effects.

3. HIPAA Release
In addition to a health care proxy, I recommend that my clients have a blanket HIPAA release. The HIPAA law bars medical practitioners from releasing medical information to anyone, even to the spouse of a patient, without a release. You may wonder why a heath care proxy isn’t a sufficient tool to serve as a HIPAA release. First, the health care proxy is “springing” in that it isn’t activated until the patient is incapacitated. Second, while the health care proxy names one person to serve at a time, you may want several people to communicate with medical providers.

Family members often have vital information about the patient, including about medications used, allergies, or general physical and mental health. HIPAA does not state medical personnel cannot LISTEN, but my experience is that if your loved one is not named on a HIPAA release, medical personnel won’t give you the time of day, likely because HIPAA includes criminal penalties for the unauthorized release of medical information.

4. Your Will
Your will names who receives your property when you die and identifies who will be in charge of paying your bills, filing your tax returns, gathering your property and distributing it according to your instructions.

Today, however, many assets pass outside of probate/apart from your will. For example, joint accounts pass to the other joint owners, regardless of what the will states; retirement plans and life insurance policies pass to designated beneficiaries, regardless of what the will states; and property in trust passes to the beneficiaries named in the trust document, again, regardless of what a will states. Assets titled in your name alone, without a beneficiary and not in trust are the only assets that actually pass under a will. More and more, the assets that pass under a will are not an individual’s largest assets (eg. 401(k)s and other retirement accounts). A good attorney will help you coordinate your asset titles and beneficiary designations with your estate plan. While this may seem easy, it isn’t and to do it correctly takes experience and time — which are not offered on Legal Zoom.

Wills also distribute your tangible personal property, such as furniture, jewelry, tools, clothing, boats, and cars. Specifying who receives your special items can be important in avoiding squabbling among children. Finally, and of great significance, a will is typically used to appoint guardians for minor children.

5. Revocable Trust
The documents listed above may be sufficient, but you may also want a revocable trust, sometimes called a "living" trust. A trust is a legal document under which trustees are named to manage and distribute property for the benefit of one or more people, the beneficiaries. A typical revocable trust has the same Trustee (e.g. me) and Beneficiary (e.g. me). Revocable Trusts are used to set up tax planning, when necessary, and to avoid probate. While probate is not a 4-letter word in Rhode Island, (sometimes, probate actually can be useful — especially in certain Medicaid situations) avoiding it may save heirs time and money.

Financial institutions today are often resistant to accepting durable powers of attorney and seem more comfortable with trusts, which is helpful once an individual becomes mentally incapacitated.

In addition to probate avoidance and incapacity protection, trusts may offer creditor protection for your heirs after you pass away. Many of my clients are interested in the creditor protection offered by trusts as a means to protect their hard-earned assets from their children’s debt, death, divorce and disability.

As you can see, most estate planning documents govern matters that occur during your life and the life of your heirs, as well as what happens at your death. Plan for life and death. Give yourself the protections and benefits offered by a solid estate plan.

Attorney Macrina G. Hjerpe is a partner in the Providence law firm Chace Ruttenberg & Freedman. She practices in the areas of Estate Planning, Probate, Estate Administration, Trust Administration, Trust Litigation, Guardianship, Business Succession Planning, Asset Protection Planning, Elder Law and Estate Litigation.