Estate Documents encompass the basic paperwork that work to define and administer your wishes and property, both during your life and after. Often these documents mean: Last Will and Testament, Durable Power of Attorney, Health Care Directive, Community Property Agreement, or various other documents meant to provide a solid basis. Work in this area can proceed fairly easily or can become extremely complex depending on the nature of your assets, your familiar relations, and the current and future health you anticipate.
Last Will and Testament.
A Last Will and Testament is a document meant to convey property (and other decisions) after death. Often this can be property from spouse to spouse with a few separate gifts, or passing property to children in equal or specific portions. In Washington, with the lenient probate rules we have in effect and relative ease of use, numerous decisions can be made in a Will and enacted during the Probate of that Will; an example of one such decision is creating a testamentary Trust which can be funded during Probate. Guardians for minors can also be nominated in a Will, streamlining that process should it have to occur.
A myth I often hear associated with Wills if you need one in order to pass property (possibly as opposed to leaving it to the state). This is incorrect. If someone dies without a Last Will and Testament, they die “intestate”, and their property passes according to a set of default rules under Washington Code, i.e. to the spouse, to the children, to the parents, to the siblings, etc. For this reason, a Will is not necessarily the most important document you execute, although having one can save your Personal Representative a lot of time and headache from paperwork and hearings. A Will also gives an opportunity to bypass certain beneficiaries for Medicaid or Tax concerns, such as setting up a Testamentary Spousal Trust or Testamentary Medicaid Special Needs Trust.
When talking about a Will, you should be asked about the nature of your property, specifically if it’s Community or Separate, if it’s Probate or NonProbate property. You should be asked about co-ownerships and family relations, including the timing of which you received certain property and with what assets. These questions all fall into the question of what is funding either a Trust or your probate. Due to these questions, it’s a good idea to speak with an attorney rather than use a form, since it’s the information we do not know that often gets us in trouble.
Typically a basic Will takes 1-2 hours to go through in simple cases, longer in the event of asset or family complexity. For spouses of moderate means, expect to have more than one meeting to go over it.
Durable Power of Attorney (or, perhaps, a Power of Attorney).
A Power of Attorney is a legal document creating an Agency Relationship with another person or entity.
Another way to put that is it allows someone or something to act on your behalf, like an employee or a contractor you’ve hired to do tasks.
Powers of Attorney are a passion of this office, given the awesome power they can confer and possible problems given that power. While there are relatively little decisions made by the client, this document may take longer to go over than a Will due to its nature. This office starts at an estimated one (1) hour flat for executing a Power of Attorney, 1.5 for a couple, although that estimation goes up depending on how complex and interesting the case is. The Client usually determines three (3) general things: 1) who do they want to confer power on, 2) how much power do they want to confer, and 3) when should that power be conferred? The answer to these questions can be determined by the exact purpose of the document, i.e. is it being used to help sell a home or is it being used as a comprehensive document for a family member with early onset dementia?
*Durable* is the default status these days, meaning the document stays in effect during periods of incompetence or incapacity. For the example of the house sale, above, that may be a *Power of Attorney* if the client does not want that power to continue if they are unavailable.
A VERY important concept for this document, which is misunderstood by a great majority of clients I speak to, is the limits of it. A Durable Power of Attorney is a TOOL, meaning it allows someone to act on your behalf. This means they have to act either with your EXPLICIT instruction (i.e. sell that house and handle my banking) or IMPLICIT instruction (i.e. you are unable to sell your house or do you banking due to incapacity and it’s necessary for your finances). Any instance of an Agent (often called an Attorney in Fact) telling their parent they must move into a nursing home because of a Power of Attorney is a misuse, or at least misunderstanding, of this document.
Health Care Directive.
A Health Care Directive is a statute driven document which answers the question of what to do if you are in a permanent vegetative state or terminally ill and unconscious, within the meaning the definition of the statute. It allows, after the consensus of two doctors and their documented signatures, the removal of certain life sustaining treatments, such as air and hydration, as though you were conscious to instruct them so. This document is facially simple, but the effects of it can require time and some reflection.
Community Property Agreement.
A Community Property Agreement (CPA) is an agreement between spouses that redefines property between them. Typically it comes with what are known as “prongs”, with between 1-3 prongs depending on what the client is trying to accomplish. Usually a first prong states that all property the spouses owned before marriage is now Community Property. Typically a second prong states that all property the spouses currently own and will own, despite the source, will become Community Property. The last prong typically says that upon the death of the first spouse, all property passes to the survivor.
This agreement is popular in avoiding probate for one of the spouses and saving some fees. It also works to simplify defining assets for marriages that included a disparate amount of Separate and Community property. Depending on what a client is trying to accomplish, not all three (3) prongs are needed.