The Essential Tools of Estate Planning
Updated: Nov 9, 2022
Estate planning typically refers to five legal documents: the Durable Power of Attorney, Designation of Health Care Surrogate, Living Will, Last Will & Testament, and Trusts. (Outside the state of Florida, a Durable Power of Attorney can be called a Financial Power of Attorney, and a Designation of Health Care Surrogate can be called a Medical Power of Attorney or a Healthcare Power of Attorney.) Think of these individual documents as tools that you'll keep in your Estate Planning Toolbox.
Each tool has a specific purpose. You can’t use a buzz saw to hammer-in a nail, and similarly, you can’t use one estate planning tool—that's meant for one specific task—to handle another job that requires an entirely different document. Each of the five estate planning tools specifically addresses a different issue.
Generally, we can separate Estate Planning tools into two categories: (1) Tools that we use in life and (2) Tools that we use after death. In a zippy little twist, we also have one special tool that can be used in life and after death, but we’ll get to that later to avoid confusion.
Tools Used in Life can be further separated into two more categories: (a) Tools that we use for our finances and other property and (b) Tools that we use for our person, with regard to our medical and health care decisions.
We can’t separate the Tools Used After Death into two categories because when a person dies, there are no medical or health care decisions for that living person anymore. After death, only the finances and the other property of the decedent remain.
Tools Used in Life
The Durable Power of Attorney, the Designation of Health Care Surrogate, and the Living Will are tools used in life. The Durable Power of Attorney addresses finances and other property. The Designation of Health Care Surrogate and Living Will address a person's medical and health care decisions.
Tools Used After Death
The Last Will & Testament is a tool used entirely after death, and it addresses the finances and other property of the decedent.
Tool Used in Life and Death
Trusts are quickly becoming the tool of choice because they can be used in both life and after death. Trusts address finances and other property. The spotlight shines brightly on Trusts for their use as a Last Will & Testament substitute to avoid probate.
Most Trusts, indeed, bypass probate, but a Trust isn’t merely a replacement for a Last Will & Testament. The Trust is used after death, like a Last Will & Testament, but you can also use this tool to transfer and manage your property DURING your life. In addition, assets can remain in a Trust long after the death of the individual who created the Trust. The use of this tool is so versatile that many people elect not to have a Last Will & Testament at all, while others choose to have a Last Will & Testament AND a Trust.
The graphic above illustrates the five legal documents that typically comprise an Estate Plan: the Durable Power of Attorney, Designation of Health Care Surrogate, Living Will, Last Will & Testament, and Trusts. Consider these documents as individual tools in your Estate Planning Toolbox. Each tool is designed with a specific purpose.
Estate Planning tools can be separated into two categories: Tools Used in Life and Tools Used After Death. Further, the Tools Used in Life can be divided into two sub-categories, based upon the purpose of these tools. Some Tools in Life are specifically used for your finances and other property, while other Tools in Life are specifically used for your person, with regard to your medical and health care decisions. Tools After Death only address the finances and other property of the decedent because there are no longer medical or health care decisions for that living person after death. One special tool, the Trust, attends to your finances and other property in both life and after death.
Please join us at Beach Barrister as we continue our legal adventure in Estate Planning and other elder law topics! Click here to watch our short companion video, Introduction to Estate Planning, under the Legal Learning Category of "Estate Planning." We'll explore the purpose of each tool in your Estate Planning Toolbox in our upcoming videos, articles, and blogs. Be sure to stop by; we'll save you a beach chair!
Plan Early. Plan Often. Plan Well.
Beach Barrister is NOT a law firm. We are an educational forum. We do NOT legally counsel individuals based upon their specific life circumstances or planning goals.
Beach Barrister is NOT a substitute for legal counsel. We highly encourage every viewer of this site to seek a local, licensed, reputable attorney to assist you with your state-specific laws, planning goals, and execution of documents.