Everyone’s estate planning needs are different. There is no such thing as a “standard” estate plan, and this is why online estate planning options don’t work. If you want to preserve your assets, make sure the right assets go to the right people after your death, and protect your loved ones from unnecessary costs and stress, you need to develop a customized estate plan that reflects your unique personal circumstances.
But, this does not mean that estate planning has to be complicated. While there is no such thing as a “standard” estate plan, there are several standard estate planning tools—and an experienced attorney can help you use these tools to create a plan that works for you.
7 of the Most-Common Estate Planning Documents in Texas
Here are seven of the most-common estate planning documents used in Texas:
1. Last Will and Testament
A last will and testament (also simply referred to as a “will”) is the foundation of almost any effective estate plan. Preparing a will serves several important purposes—even if you use a trust to distribute your assets, as we discuss below. Some of the main functions of a will include:
- Ensuring that your assets will not be distributed according to Texas’s intestate succession laws (which most likely would not align with your wishes);
- Allowing you to designate the person who will manage your final affairs (your “personal representative”); and,
- Allowing you to designate a guardian for your minor children in the event that you (and your current or former spouse or partner) were to die unexpectedly.
2. Revocable Trust
While you can use your will to distribute your assets after death, this might not be the best option for a variety of different reasons. Establishing a trust allows you to avoid the drawbacks of distributing your assets through your will, and establishing a revocable trust allows you to maintain full control over your assets during your lifetime.
One of the main drawbacks of distributing your assets through your will is that it subjects your assets (and your loved ones) to probate. Probate is the formal legal process for winding up a person’s final affairs in court. If your assets are subject to probate, it will take longer and be more expensive to administer your estate, and there is a greater chance that your loved ones will run into issues along the way.
For this reason alone, many Texans use a revocable trust as the primary document for distributing their assets after death. With a revocable trust, you decide who receives your assets (and when)—these are your “beneficiaries”—and you also designate a “trustee” who will be responsible for managing and protecting the trust’s assets after your death. However, during your lifetime, you retain full control over your assets, and you can modify your revocable trust as you see fit.
3. Irrevocable Trust
Irrevocable trusts provide the same probate-avoidance benefit as revocable trusts. However, they come with other benefits (and limitations) as well. There are several different types of irrevocable trusts, most of which are used for specific estate planning purposes. Some examples of commonly-used irrevocable trusts include:
- Life insurance trusts
- QTIP and QDOT trusts for married couples
- Generation-skipping trusts
- Charitable lead trusts
- Charitable remainder trusts
While irrevocable trusts are subject to certain limitations, they often offer tax savings, access to government benefits, and other benefits in exchange. As a result, for individuals and couples with specific estate planning goals, it will usually be worthwhile to at least consider the option of incorporating an irrevocable trust into their estate plan.
4. Durable Power of Attorney
A durable power of attorney is an estate planning tool that is used to allow someone else to manage your finances should you become unable to do so. While the need for a durable power of attorney most commonly arises in old age, having a durable power of attorney can also become necessary if you are involved in a serious accident or become severely ill.
When you prepare a durable power of attorney as part of your estate plan, this document only takes effect in the event that you become incapacitated. You choose the person who will manage your finances; and, as with most other estate planning documents, you retain the ability to modify your durable power of attorney over time.
5. Medical Power of Attorney
A medical power of attorney is similar to a durable power of attorney, but it pertains to health care decision-making. Preparing a medical power of attorney gives you the opportunity to choose someone you trust to make decisions for you should you become unable to make them on your own, and the document only takes effect in the event of your incapacity.
6. Directive to Physicians and Family or Surrogates (a “Living Will”)
Preparing a Directive to Physicians and Family or Surrogates (also commonly referred to as a “living will”) allows you to specify your preferences regarding life-sustaining and end-of-life care. This not only ensures that you will receive treatment according to your wishes, but it also protects your loved ones from needing to make extremely difficult decisions on your behalf. The Texas Department of Health and Human Services has published a standard form that should be familiar to most health care providers.
7. HIPAA Authorization
A HIPAA Authorization is an important document that should go along with a medical power of attorney and a living will. This document allows your health care providers and your health insurance company to disclose your medical records to the individual(s) who you have designated to manage your care on your behalf.
Schedule a Free Estate Planning Consultation in Plano, TX
Do you have questions about preparing an estate plan? If so, we encourage you to get in touch. We provide comprehensive estate planning services to individuals and couples throughout Texas. To speak with an experienced Plano estate planning lawyer in confidence, call us at 972-881-9700 or request a free consultation online today.