How Documents Work Together

Image of a stack of paper. Photo by Beatriz Pérez Moya on Unsplash.


For the vast majority of clients, a complete estate plan includes four documents: a Revocable Living Trust, a Pourover Will, a Financial Power of Attorney and an Advance Health Care Directive. Each document covers a different set of concerns, different assets, and different effective time periods. The two basic set of concerns are financial and health care. The two basic time periods they cover is either before or after death, and the two basic types of assets are Trust and non-Trust assets.


Financial Concerns

For your financial concerns the grid looks something like this:

Diagram of when individual documents are effective.


A valid Revocable Living Trust operates during your lifetime and after your death. Because of its longevity, a Trust can help manage your affairs during your senior years or incapacity, and it can distribute your assets to your loved ones on your death. However, it only governs assets that you have transferred into your Trust estate. (Another blog post explains how to make this transfer.)

A Financial Power of Attorney operates only during your lifetime and only governs non-Trust assets. If you have a bank account in your individual name (not in the name of your Trust), your Agent under your Power of Attorney can access the money in that account. If you give the authority to your Agent in your Financial Power of Attorney, your Agent can file your tax returns, use your credit cards, access your safe-deposit box, and apply for government benefits for you among other things. However, at your death, the Financial Power of Attorney terminates, and your Agent no longer has the authority to act on your behalf.

At the same time that the Financial Power of Attorney terminates, your Will becomes effective. A Will becomes effective at the moment of your death, and it governs only non-Trust assets. The sole purpose of most Wills is to transfer assets on your death. To do this, you name a person to be in charge of the transfer (called the “Executor”) and you instruct the Executor how you want your non-Trust assets distributed.


Personal Concerns

An Advance Health Care Directive deals only with your health care and personal care, and it is effective both before and after death. So, whomever you name as your Agent under an Advance Health Care Directive is authorized to make decisions about whether you will receive medical care, what kind of medical care and the treatment of your remains. The Agent’s decisions must be consistent with your instructions. So, if your Agent knows that your religious convictions do not include medical treatment, your Agent should not authorize medical treatment for you. If your Agent knows that you do not want life sustaining treatment, your Agent should not authorize it for you. If you instruct your Agent to have your organs donated and your remains cremated, your Agent should follow those instructions. However, you have the right to make these decisions for yourself as long as you have the mental and physical capacity to do so. In other words, you can delegate someone else to make these decisions for you if you don’t want to make them or if you can’t make them, but as long as you have the mental and physical capacity, you can override your Agent’s decisions.

Keep in mind that these four documents are the skeleton of a complete plan, and your situation may differ. However, if you have these four documents in place, they offer complete coverage both before and after death, both Trust and non-Trust assets and both financial and personal concerns.


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