End-of-Life Planning can be a difficult subject for many. For one, nobody likes the idea of contemplating their own mortality. For another, for most people life is… well, complicated. Most of us have some combination of Real Property, Personal Property, bank accounts, retirement accounts, stocks, bonds, annuities, as well as any number of family, friends, spouses (and former spouses), and other relationships they may wish to honor in their final wishes, not to mention the legal terminology involved.
Below are some terms to help you understand the basics of Estate Planning.
- Probate: Probate is the term for the legal process of distributing the assets (“Estate”) of a person who has passed away (the “Decedent”). If the Decedent did not leave a Will (defined below) they are said to have died Intestate,and the Estate is distributed according to the laws of the Commonwealth of Massachusetts.
If the Decedent did leave a Will, the probate process is used to validate will and ensure their assets are distributed according to their wishes and Massachusetts law.
- Last Will & Testament: Commonly referred to as a Will, this document outlines your instructions for what should happen to your property after you pass. The individual in charge of carrying out your instructions is called a Personal Representative (formerly Executor/trix) and can be any legally competent person over the age of eighteen.
- Power of Attorney: The Power of Attorney, (often abbreviated “POA”) designates those persons or entities in charge of managing your affairs (Attorney-in-fact) while you are alive, but either incapacitated or otherwise engaged. A POA can be as narrow or as broad as you want it to be, from appointing someone to conduct a single task on your behalf, to full access to your bank accounts and the ability to sell your house.
- Healthcare Proxy: Last but not least of three documents which make up the Basic Estate Plan is the Healthcare Proxy, or HCP. As the name suggests, the purpose of this document is to appoint a Proxy to make healthcare-related decisions on your behalf should you become incapacitated, such as deciding between treatment options and terminating life support.
- Trust: There are a few different kinds of Trust (an explanation of which likely merits a future article), but a Trust is a legal entity which receives assets from one or more persons, the Settlor(s), to be held and managed another, the Trustee, for the benefit of a third party, the Beneficiary. Each subcategory of Trust has potential benefits and drawbacks depending on which type of Trust you use, and when/how you transfer assets into said Trust, but the major point for Estate Planning purposes is that assets placed into a Trust by you during your lifetime do not need to go through Probate.
Although the above should help you understand the basics the best way to ensure your Estate is handled the right way – whether in the Planning or Probate stage – is to talk to a licensed Estate Planning attorney (I know, you’re shocked).