Estate Planning Basics
Start at the Beginning

In order to start to understand estate planning basics, you will first need to understand some definitions.

There are very few of these, so don’t panic. However, to grasp why you need to do this, it is important to have this foundation.

So, what are the basics of estate planning?

Well, let’s first discuss what estate planning actually is.

Estate planning basics can be defined as:

The preparation of a plan of administration and disposition of one’s property before or after death, including wills, trusts, gifts, power of attorney, health care surrogate, living will, durable power of attorney, etc.

This estate planning basics definition may seem a bit intimidating to some people because of the unfamiliar terms.

First I will define and discuss each of the terms you need to know for your estate planning basics.

Will or Testament

A will or testament is a legal declaration by which a person, the testator, names one or more persons to manage his estate and provides for the transfer of his property at death.

Living Will

A legal document that sets out the medical care on individual, wants or does not want, in the event that he or she becomes incapable of communicating his or her wishes.


A relationship that is created at the direction of an individual. One or more persons will hold the individual’s property subject to certain duties to use and protect it for the benefit of other. See separate discussion on trusts at ESTATE PLANNING AND TRUSTS.

Power of Attorney (POA)

Also called a letter of attorney. This is a written authorization to represent or act on another's behalf in private affairs, business, or some other legal matter. The person authorizing the other to act is the principal, grantor, or donor (of the power), and the one authorized to act is the agent, donee, or attorney. A power of attorney becomes invalid when the person authorizing the POA becomes incapable of making decisions. See Durable Power of Attorney below.

Durable Power of Attorney

A legal document that enables a person (grantor) to designate another person as their agent or attorney-in-fact. This agent can act on behalf of the grantor even in the event the grantor becomes disabled or incapacitated. A “durable” power of attorney stays valid even if the grantor is not able to handle his or her affairs.


Also known as a health care proxy or agent. This is an advocate for an incompetent person who speaks for that person in regards to the desires for their life. Advances in health care and in treatment of diseases in our society have resulted in a longer life expectancy. However, with these advancements there are also some negative factors. For many people, our minds do not keep up with our bodies. As a result of these factors, many people need increasing amounts of care as they age. These people begin to rely on others to help them make every day decisions. Eventually these people reach a stage where they are completely incapable of making any decisions on their own.


A voluntary transfer of property or of interest in a property from one individual (donor) to another (donee) made gratuitously to the recipient.


This is the legal process of administering the estate of a deceased person. It resolves claims and distributes the assets. A probate court decides the validity of the will and interprets the instructions left by the deceased.

Now that you understand some of the estate planning basics terminology, let’s take a look at some basic estate planning documents.

Documents for Estate Planning Basics

The bottom line of estate planning basics, as mentioned above, is how your assets will be handled if you become incapable, and eventually when you die.

Once you decide how you want this handled, there are a two major types of documents you need to have in place to assure your wishes are followed.

1) Last Will and Testament

This document is the one most people think of when they start their estate planning basics. A will is a legal document used to transfer property you own at the time of your death. A will can also appoint a Personal Representative (or Executor) to carry out your wishes. A will only becomes effective upon your death and must go through probate.

Many people think they don’t need a will because they don’t have a lot of possessions. That is false. If you do not have a will, your property disposition will become subject to the decisions of the court. Even if you are married you must have a will to avoid having the court make decisions.

If you are in a relationship that can be described as alternative you have other issues. These relationships would be long term gay and lesbian relationships or a couple that has lived together a long time but never married. In these cases careful estate planning is essential.

2) Advanced Directives

The first advanced directive you will need is a durable power of attorney for Health Care or a Health Care Proxy. In these documents you will designate a person to make decisions regarding your health care treatment in the event you are unable to make those decisions yourself. This creates your “voice” when you can no longer communicate your wishes.

Next you will want a living will. This will give the doctors and hospitals your instructions regarding the nature and extent of care you want should you suffer permanent incapacity.

Note how the living will differs from the health care proxy. If you become a victim of a condition where you can live a long time (i.e. Alzheimer’s) but would be unable to make decisions. A living will allows the doctors to provide care (or not provide care) according to your wishes in cases of permanent incapacity (usually death is imminent or would be imminent without life saving techniques like feeding tubes).

Next you will want to make sure you have a HIPPA release. The current law has greatly curbed access to medical records and the release of information without the specific consent of the patient. In order for your loved ones (or your representatives) to have access to information on which they will make decisions for you, they will need the HIPPA release.

You will also want to make sure someone has a durable power of attorney. This document can restrict the agent to act in certain areas and not in others. Make sure the power of attorney covers your health care, finances, property and other items that will need to be run or maintained. You can also give power of attorney to one person for your financial needs, another for your health needs, etc. Make sure the powers are clearly defined.Again, if you are in an alternative relationship, be very careful with these forms. They need to be filled out carefully or you will find yourself without the ability to care for your loved one and their family taking over.

Each state has different legal requirements for their particular type of documents. Be sure to consult an attorney in the state that you reside and in which you will file your will.

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