By: Ethan R. Okura
This is the time of the year when we make an extra effort to be thankful for all that we have. We focus on the spirit of giving and we wrap up presents for our family and loved ones.
This thought made me chuckle a little at a recent meeting with a client at what our law firm calls the “Wrap-up Meeting.” This is usually the final meeting with our client after they have signed their estate planning documents, we’ve recorded their deed(s) and made copies of their documents, which we assemble in a lovely binder that we give them. We schedule this wrap-up meeting so that we can review once again with our clients what each of their estate planning documents is for, the steps they need to take next to ensure that their estate plan will have its intended effect — such as funding their trust with their bank and stock accounts, and answer any remaining questions they may have.
So, in honor of wrapping up presents, here’s a quick summary of the Okura & Associates wrap-up meeting for anyone who may have forgotten any of these details.
Estate Planning Documents
• Advanced Health Care Directives. This document lets you choose whether you want life-sustaining treatment (e.g., life support machines) and/or artificial nutrition and hydration (e.g., tube feeding) if you become unable to communicate your decisions in the future due to an illness or loss of consciousness. You can also select whether you want pain medication administered to ease your suffering, even if the medication might cause you to pass away sooner. This document also lets you name someone who can make other medical decisions on your behalf in the future when you can no longer make or communicate those decisions yourself.
• HIPAA Authorization. The Health Insurance Portability and Accountability Act Authorization allows your designated agent(s) to access your medical records and get your health information from your doctor. Even though your agent can make medical decisions for you using your AHCD under state law, she or he may not know what your medical condition is nor be able to get any information about your health from your doctors due to the federal HIPAA medical records privacy law.
• Durable Power of Attorney (DPOA). This document allows your agent to make financial decisions for you and to manage your assets when you are not able to do so or when you want to delegate that responsibility to him or her. *Note: Your agent cannot use the Durable Power of Attorney after you have passed on. Also, in most cases, your agent cannot use your Durable Power of Attorney to manage the assets in your Revocable or Irrevocable Trust. The DPOA is only valid to manage assets in your individual name while you are still alive.
• Last Will and Testament (Will). This document spells out who you want to be your personal representative (what used to be called the “executor”) of your estate. It also designates who will inherit any assets that you have in your own name at the time of your death that are not in your trust(s), and that do not have a named beneficiary or a joint owner. Finally, your will can also name the guardian(s) of your minor children (if you have any who are minors when you pass away). The guardian isn’t necessarily the person who will manage your assets and the finances for your minor children — the guardian is just legally responsible for their upbringing and physical welfare. (If you wish, however, the person you select as the guardian could also be the one who will manage your assets for your minor children.)
• Revocable Living Trust (RLT). The Revocable Trust is the agreement you create between yourself as the settlor, the person setting up the trust, and yourself as the trustee, the person who manages the trust assets. During your lifetime, you are also the beneficiary of the trust (and the trustee uses the trust assets for the benefit of the beneficiary). When you become incapacitated or incapable of managing your finances, your successor trustee can step in to manage your trust assets for you. You will still be the settlor and the beneficiary, but the new (successor) trustee will deal with the bank accounts, bills and investments. After you pass away, your spouse, children, other family members, loved ones or favorite charity could become the beneficiaries. (You get to designate who inherits which assets under any conditions you desire.)
• Short Form Trust (SFT). This is the document you can take to your bank, stock broker, etc., to change the title (ownership) of the accounts from your name to the name of the trust. It’s important to fund your trust as soon as you can after it has been created, because any assets not titled in the name of the trustee of the trust cannot be controlled by the trustee or governed by the trust agreement. If it is in your individual name, it will be governed by your will and the asset might have to go through probate when you pass away.
I hope this Holiday year-end wrap-up review was helpful for you. It is our firm’s gift to you. Please enjoy this special time of year with your loved ones — and, if it has been more than a couple of years since you last updated your estate plan, make a New Year’s resolution to update it early in 2019!
© OKURA & ASSOCIATES, 2018