In addition to wills and living trusts, various other documents may be used to carry out your wishes, either in case of death or in case of illness or accident. Methods are also available for giving family members an opportunity to learn management of a family business before the business is sold or given to them. Management rights may also be given for limited periods of time in order to free the actual owners for a long-awaited vacation. The following documents are commonly used to accomplish these types of life and estate planning goals.

Powers of attorney give another person the power to act in place of the principal (the person signing and authorizing the power of attorney). The power of attorney can be drafted so that it would only become effective upon the disability or incapacity of the principal, or so that it is effective immediately. However, powers of attorney which only become effective upon incapacity may create issues in determining when incapacity occurs.

The power of attorney allows someone else to handle affairs such as payment of bills, cashing checks, and selling assets. A specific power of attorney may be drafted which grants only very specific, limited powers to the person named as agent (the person given power to act for the principal). This could include the power to manage a particular piece of real estate, or a particular account, investment, or business.

Powers of attorney terminate upon the disability or incapacity of the principal unless the power of attorney is durable, specifically stating that it will remain effective after the disability or incapacity of the principal. Powers of attorney terminate upon death, so are not effective to manage or transfer assets after the principal's death.

Health Care Directives contain directions regarding prolonging life by artificial means if the condition is terminal. These documents provide family members or others appointed by the document with authority to make medical decisions for you if you are unable to do so.

It is a very good idea for everyone to make a list of assets and directions for loved ones to use in case of death or incapacity. This list can include instructions for funeral arrangements and memorial services, location of documents including insurance policies, deeds, securities, and evidence of other assets, location of bank accounts, and names and addresses of professionals who would have information regarding the estate, including the attorney, accountant, insurance agent, and other financial advisors. Location of the records, safe deposit box, wills, trusts, and any other pertinent documents should also be listed. This is not a legal document, but certainly is a practical one. Some estate planning attorneys provide binders which include copies of estate planning documents as well as pages for instructions and location of information.

Various types of trust arrangements may be very beneficial, and can be individually suited to meet each specific need or desire. Trusts are very commonly used when minor children or other dependents are involved, when a business exists which will need continued management, for tax planning purposes, and to avoid or minimize probate.

If you have a child, spouse or other beneficiary (even they are an adult) that is currently receiving or will be receiving disability benefits in the future (or other such type of governmental benefits), their inheritance may be at risk to governmental claims…UNLESS…you prepare or set-up a Special Needs Trust (SNT) to receive their inheritance distribution.

The SNT will allow your loved one to receive the full share of their inheritance, which will be managed by a trustee that you select, to raise the quality of their lives but NOT interfere with their ongoing disability benefits. The beneficiary will get full use of the trust assets, which will SUPPLEMENT but not SUPPLANT their governmental assistance and/or benefits received. If there are any assets remaining in the SNT upon the beneficiaries death, then the remainder shall be distributed to your other beneficiaries (as per the terms of your Will or Trust) and not be distributed to any governmental agency for benefits received by your loved one during their lifetime.

Living trusts come into being during lifetime, whereas testamentary trusts only come into being upon death. Testamentary trusts do not avoid probate, but are an effective method of providing for management of assets for beneficiaries, and for tax planning.

Terminology depends upon whether the agreement is signed before or after marriage, and on the individual state of residency. Since many people move from state to state or own property in more than one state, we will discuss rules applicable to all states here.

It is important for all married couples to assess the impact of their state law on their situation. If you reside in one of the community property states you share ownership of property with your spouse regardless of whose name is on an asset. In common law states, the name on the title of property affects ownership rights more completely. However, both community and common law states have various rules protecting spousal interests in property. If the effect of your state law is not beneficial for you, you and your spouse may adapt its effect by written agreement. Various types of documents are available, depending upon the individual circumstances and upon whether both spouses are capable and willing to sign an agreement.

If a specific need or concern exists regarding spousal property interests, a solution can usually be found. The law is very flexible for those who plan ahead. Problems arise after incompetency or death has occurred, when the party involved is no longer able to express his/her wishes. An estate planning professional can be very helpful in sitting down with you to analyze your situation and to suggest methods of preventing future issues.