Estate Planning for Every Family: 5 Scenarios

Estate Planning is not just for the elderly. It’s not just for the wealthy. Estate Planning is for anyone who wants to protect their family and legacy after they’re gone.

But everyone’s Estate Planning needs are different and no two plans look alike. So today we’ve put together a few examples of how an Estate Plan may differ, depending on specific situations.

Disclaimer: These are fictional stories that give guidance, but should not be considered legal advice. Discuss your specific family and goals with an experienced estate planning and elder law attorney.

Sam and Sally are a married couple in their early 20s with one minor child. Sam just started working, and Sally is staying at home with their newborn. They do not have many assets and have student loan debt. Sam has a $500,000 life insurance policy of which Sally is the beneficiary. Their most important goal is to make the transfer of assets as seamless as possible if something were to happen. Their next priority is to provide guardian designations in case something happens to them while their children are still minors.

Their plan includes:

  • Wills, with asset-protected trusts for their child and any additional children inside the Wills;
  • General Durable Powers of Attorney;
  • Medical Durable Powers of Attorney;
  • HIPAA Authorization; and
  • Advance Health Care Directive (Living Will).

The Wills name people to act as executors of their estates and allow the executors to transfer any assets into the trust (not transferred during their lifetime). Additionally, the Wills name guardians for their child and future children. Even though the trusts within the Wills will not avoid probate, they ensure that in the unlikely circumstance that both parents die, the child's inheritance will pass according to the parents' wishes.

The Powers of Attorney for Finances are some of the most essential documents and function to designate an agent to act on their behalf to manage financial decisions. Their agent has broad authority to manage their finances, such as the ability to pay bills and other expenses, purchase or sell assets, open bank accounts or withdraw funds from bank accounts, and borrow money and gift assets for planning purposes.

The Medical Durable Powers of Attorney designate a trusted individual to make medical decisions if Sam and Sally are unable to do so. The person named as the agent must follow their wishes as stated in the Advance Health Care Directive or Medical Durable Power of Attorney. These decisions include the right to consent or refuse life-prolonging procedures, request information regarding the child's health, and hire and fire health care professionals.

The Advance Medical Directives specify the type of medical treatment they do or do not want to receive if they are incapacitated. Most importantly, they address in their Advance Directive if they wish to accept or refuse life-prolonging treatments (e.g., feeding tubes, ventilators, respirators, etc.).

Jack and Jill are a married couple, in their early 40s, with two minor children. They have two large life-insurance policies that exceed $1 million per parent. If both parents passed away, their children would receive the full amount when they reach the age of 18. Their most important goal is to ensure that their children do not squander their inheritance by their potential inability to steward the resources, their creditors, and potential divorcing spouses. Their next priority is to provide guardian designations in case something happens to them while their children are still minors.

Their plan includes:

  • A Revocable Trust, with asset-protected trust for their children;
  • Pour-Over Wills;
  • General Durable Powers of Attorney;
  • Medical Durable Powers of Attorney;
  • HIPAA Authorization;
  • Advance Health Care Directive (Living Will); and
  • Deeds.

The Trust offers them complete asset control during their lifetime, provides for them and their loved ones in the event of incapacity, and upon death allows assets to pass to loved ones without the costs, delays, and publicity associated with court probate.

The Wills name people to act as executors of their estates and allow the executors to transfer any assets into the trust, not transferred during their lifetime. Additionally, the Wills name guardians for their children.

The Powers of Attorney for Finances designate an agent to act on their behalf to manage financial decisions. Their agent has broad authority to manage their finances such as the ability to pay bills and other expenses, purchase or sell assets, open bank accounts or withdraw funds from bank accounts, and borrow money and gift assets for planning purposes.

The Medical Durable Powers of Attorney designate a trusted individual to make medical decisions if Jack and Jill are unable to do so. The person named as the agent must follow their wishes as stated in the Advance Health Care Directive or Medical Durable Power of Attorney. These decisions include the right to consent or refuse life-prolonging procedures, request information regarding your child's health, and hire and fire health care professionals.

The Advance Medical Directives specify the type of medical treatment they do or do not want to receive if they are incapacitated. Most importantly, they address in their Advance Directive if they wish to accept or refuse life-prolonging treatments (e.g., feeding tubes, ventilators, respirators, etc.).

The Deeds transfer their interest in real property to their trust, so it will avoid going through probate.

Tom and Tina are a married couple, in their early 60s, with adult children. Tina started a business that exceeded all expectations — it is now worth over $3 million. Their son is involved in the business, but their daughter is more interested in the business' charitable foundation. Their most important goal is to ensure the company continues, without a division of the family. Their next priority is to pass down the work ethic and values that played a significant role in creating the family’s development of the business.

Their plan includes:

  • A Revocable Trust, with asset-protected trusts for their children;
  • Pour-Over Wills;
  • General Durable Powers of Attorney;
  • Medical Durable Powers of Attorney;
  • HIPAA Authorization;
  • Advance Health Care Directive (Living Will);
  • Deeds for the primary residence and investment properties; and
  • Review and update of corporate documents for the business to strategically transfer the company to their son.

The Trust offers them complete asset control during their lifetime, provides for them and their loved ones in the event of incapacity, and upon death allows assets to pass to loved ones without the costs, delays, and publicity associated with court probate.

The Wills name people to act as executors of their estates and allow the executors to transfer any assets into the trust, not transferred during their lifetime.

The Powers of Attorney for Finances designate an agent to act on their behalf to manage financial decisions. Their agent has broad authority to manage their finances, such as the ability to pay bills and other expenses, purchase or sell assets, open bank accounts or withdraw funds from bank accounts, and borrow money and gift assets for planning purposes.

The Medical Durable Powers of Attorney designate a trusted individual to make medical decisions if they are unable to do so. The person named as the agent must follow their wishes as stated in the Advance Health Care Directive or Medical Durable Power of Attorney. These decisions include the right to consent or refuse life-prolonging procedures, request information regarding your child's health, and hire and fire health care professionals.

The Advance Medical Directives specify the type of medical treatment they do or do not want to receive if they are incapacitated. Most importantly, they address in their Advance Directive if they wish to accept or refuse life-prolonging treatments (e.g., feeding tubes, ventilators, respirators, etc.).

The Deeds transfer their interest in any real property to their trust, so the properties will avoid going through probate.

The Business Transfer ensures that their son inherits the business in a tax-efficient way, without planning to distribute other assets to their daughter so that she can flourish in her chosen career.

Bill and Betty are a married couple, in their late 70s, with adult children. They are living on social security and receive Medicare for their health insurance. Bill was recently diagnosed with dementia, after which they learned that Medicare would not cover nursing home care if Betty is unable to take care of him. They own their home and approximately $250,000 in retirement assets. Their most important goal is to protect their assets from the nursing home, if needed. Their next priority is to pass down anything left to their children.

Their plan includes:

  • An Irrevocable Trust, with asset-protected trusts for their children;
  • Pour-Over Wills;
  • General Durable Powers of Attorney;
  • Medical Durable Powers of Attorney;
  • HIPAA Authorization;
  • Advance Health Care Directive (Living Will); and
  • Deeds for the primary residence.

The Irrevocable Trust transfers assets out of their name to begin the five year wait time before they can qualify for Medicaid to help with their long-term care, if needed. Upon death, the Irrevocable Trust allows assets to pass to loved ones without the costs, delays, and publicity associated with court probate.

The Wills name people to act as executors of their estates and allow the executors to transfer any assets into the trust, not transferred during their lifetime.

The Powers of Attorney for Finances designate an agent to act on their behalf to manage financial decisions. Their agent has broad authority to manage their finances, such as the ability to pay bills and other expenses, purchase or sell assets, open bank accounts or withdraw funds from bank accounts, and borrow money and gift assets for planning purposes.

The Medical Durable Powers of Attorney designate a trusted individual to make medical decisions if they are unable to do so. The person named as the agent must follow their wishes, as stated in the Advance Health Care Directive or Medical Durable Power of Attorney. These decisions include the right to consent or refuse life-prolonging procedures, request information regarding your child's health, and hire and fire health care professionals.

The Advance Medical Directives specify the type of medical treatment they do or do not want to receive if they are incapacitated. Most importantly, they address in their Advance Directive if they wish to accept or refuse life-prolonging treatments (e.g., feeding tubes, ventilators, respirators, etc.).

The Deeds transfer their interest in real property to their trust, to protect the equity in the home and avoid going through probate.

Clark and Claire are a married couple, in their late 70s, with adult children. They are living on social security and receive Medicare for their health insurance. Clark was diagnosed with dementia a few years ago. Unfortunately, Clark needs care nursing level care now. They own their home and approximately $250,000 in retirement assets. Their most important goal is to protect their assets from the nursing home to help Claire at home. Their next priority is to pass down anything left to their children.

Their plan includes:

  • A Will with Supplemental Needs Trust in the Will for Claire;
  • General Durable Power of Attorney for Claire;
  • Guardianship for Sam;
  • Medical Durable Powers of Attorney for Claire;
  • HIPAA Authorization for Claire;
  • Advance Health Care Directive (Living Will) for Claire;
  • Comprehensive Medicaid plan; and
  • Deeds for the primary residence.

Because Clark lacks capacity, he is unable to sign the estate planning documents. Guardianship is a protective arrangement established by the court that declares an individual mentally incapacitated and appoints a guardian to manage their personal affairs, including responsibility for making decisions regarding the person's support, care, health, safety, rehabilitation, education, treatment, and residence. The guardianship is a remedy of last resort after Clark lost the capacity to establish a Power of Attorney.

The Will ensures that if Claire dies before Clark, any inheritance from Claire to Clark will not negatively impact his ability to receive Medicaid.

The Powers of Attorney for Finances designate an agent to act on their behalf to manage financial decisions. Their agent has broad authority to manage their finances, such as the ability to pay bills and other expenses, purchase or sell assets, open bank accounts or withdraw funds from bank accounts, and borrow money and gift assets for planning purposes.

The Medical Durable Powers of Attorney designate a trusted individual to make medical decisions if they are unable to do so. The person named as the agent must follow their wishes, as stated in the Advance Health Care Directive or Medical Durable Power of Attorney. These decisions include the right to consent or refuse life-prolonging procedures, request information regarding your child's health, and hire and fire health care professionals.

The Advance Medical Directives specify the type of medical treatment they do or do not want to receive if they are incapacitated. Most importantly, they address in their Advance Directive if they wish to accept or refuse life-prolonging treatments (e.g., feeding tubes, ventilators, respirators, etc.).

Davis Law Group Can Help

You can see that each family’s Estate Planning needs vary, and also that an Estate Plan may need to evolve over time as situations change. That’s why it’s critical, regardless of your age or assets, to put a plan together for your family. An experienced Estate Planning and Trust Administration attorney at Davis Law Group can help you do just that. During this process we’ll discuss your current needs and concerns as well as future possibilities. We follow up with our Estate Planning clients on an annual basis and make changes as needed so that you and your family are always cared for and there are never any unfortunate surprises. Contact us today to get started.