There are all kinds of rules that apply to your estate plan.  Rules about taxes, about who can be written out of your estate plan, about assuring that the things you leave behind will end up in the hands of your chosen beneficiaries, and even default rules about what will happen if you do not document your estate plan.  Perhaps the most important rule to keep in mind is that, to a very great extent, you get to write the rules about what will happen to you and to your assets if you ever lose the ability to make decisions—either because of incapacity or death.  Your estate plan is your personal rulebook to cover those eventualities.  Designing your rulebook might be one of the most important things you do during your lifetime. 

This is a true factual scenario that could have been avoided by the right rulebook:  Mom died without a Will, survived by Daughter, who was an only child.  The applicable default rules provided that Daughter was Mom’s sole heir.  Daughter died 35 days later, also without a Will.  Daughter had no kids or spouse, which meant that her sole heir was Dad, who had divorced Mom and married Mistress 44 years earlier.  Dad died without a Will two weeks before the distribution from Daughter’s estate, leaving Mistress as his sole heir.  The end result is that Mom’s entire estate went to the woman with whom her husband had cheated 45 years earlier.  That whirring sound you hear may very well be Mom turning over in her grave.  By not having a very simple rulebook in place, Mom allowed her estate to go to the last person she would have wanted to receive it.  Mom could have easily avoided this result by signing a Will that left everything to Daughter, provided Daughter outlived her by more than 60 days.  If not, then Mom's Will would leave everything to Mom’s Favorite Charity.  Mom could easily have planned for that kind of certainty rather than leaving her assets to a very unfortunate (from Mom's standpoint) destiny.

In addition to a Will, most of us would be well-advised to have in place an advance health-care directive (AHCD), a HIPAA authorization, and a durable power of attorney (DPA).  The AHCD and HIPAA authorization allow your hand-picked substitute decision makers to talk with your physicians and make health-care decisions for you (including end of life decisions) if you are unable to communicate your own wishes.  The DPA allows your hand-picked substitute decision makers to deal with your bank accounts and other assets in the event that you are incapacitated and unable to pay your own bills.

Depending on your circumstances, your rulebook may include other documents as well, such as one or more trust agreements.  Having a well thought out rulebook is one way to rest assured that your wishes will be followed when you are no longer to express them yourself.  It may be an opportunity that you can't afford to pass up.


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