More About Estate Planning
Some of the most common tools used in estate planning are:
Last Will and Testament - a document that only takes effect at a person's death and which controls what will happen to property over which the person had sole ownership. Such property is often called a person's "probate estate"
Durable Power of Attorney - a document by which a person gives someone else full or limited power to control their property, even if the person making the power of attorney later becomes incompetent. The person given the control is often call an "attorney in fact." It is important to note that a power of attorney expires at a persons's death.
Health Care Power of Attorney -a document by which a person gives someone else the power to make health care decisions on their behalf in the event that person is unable to do so themselves.
Living Will - a document that instructs what steps can be taken to prolong life in the event the person creating it is in a terminal state with no expectation of recovery and is unable to communicate.
Note - For several years, the State of Tennessee has also provided forms called Advance Directives and Advance Care Plans with Appointment of Health Care Agent that function similarly to Health Care Powers of Attorney and Living Wills. Click here to download a presentation on these documents from the Tennessee Department of Health.
Trust - an agreement by which a person (often called the Grantor or Trustor) gives property to another person (a Trustee) for the benefit of a third person (the Beneficiary). Sometimes the Grantor and Trustee are the same person. Trusts can take effect immediately or in the future. They can be created during a person's lifetime or at death through a will. They can require that the property be given immediately to the Beneficiary by the Trustee or they can direct that the property be held for the lifetime of the Beneficiary or even longer. In short, Trusts are very flexible documents. Like any tool however, they can either be used properly to carry out a person's intent or improperly to thwart that intent or add unnecessary complications.