Estate Planning Documents and Probate

Estate planning documents include wills, trusts, powers of attorney, and advance directives. Collectively, they ensure that a person’s assets are distributed according to their wishes after they pass away and specify how they want others to handle their health and financial decisions if they become unable to do so.

Wills: Fewer than half of Americans make a will. Older adults are no exception. A 2016 Gallup poll found that more than 30 percent of people age 65 and older did not have a will, nor did more than 40 percent of people age 50–64. Many draft one but never complete the process by signing and having it witnessed.

Notarization makes wills (whether in paper or electronic) “self-proving.” This means that the witnesses are not required to testify in probate court if the will is contested.

Trusts: A trust is a legal entity that owns the property and assets placed in it. It is managed by a trustee. One benefit of trusts is that they do not go through probate court when a person dies. Therefore, they transfer assets very quickly. They also are not public, ensuring privacy for the benefactor and beneficiary. State laws governing trusts vary considerably. This inconsistency may present problems for people who move to another state upon retirement. In 2000, the Uniform Law Commission adopted a Uniform Trust Code to help improve the certainty and predictability of trust interpretation by the courts. It also helps reduce trust preparation costs for consumers.

Powers of attorney: A power of attorney (POA) is a signed legal document in which a person appoints someone else, commonly referred to as an agent, to act on their behalf. Federal agencies sometimes have separate programs to do this. For example, the Social Security Administration does not recognize powers of attorney. Instead, it will appoint a “representative payee” to manage another person’s Social Security account. Similarly, the Department of Veterans Affairs appoints its own fiduciaries.

Powers of attorney may be limited to a particular purpose or period. Other times, they are general and can cover a range of legal, medical, and financial transactions.

An ordinary power of attorney expires if the person granting the POA becomes incapacitated. A durable POA, on the other hand, remains effective if the granting person becomes incapacitated.

A POA is private. Unlike guardianship, there is no court oversight (see also Adult Guardianship). State laws often are unclear about the role and responsibilities of those signing and accepting powers of attorney. The combination of broad consent, lack of oversight, and unclear duties can make it possible for a POA to be misused. In 2006, the Uniform Law Commission approved a revised Uniform Power of Attorney Act. This act established a set of default rules to increase uniformity of laws governing powers of attorneys across states.

Caregivers and elder law attorneys frequently complain that financial institutions improperly refuse to accept a POA. Such refusals can create hardships for people who need designated surrogates to act on their behalf. This is especially important when the person who executed the POA now lacks the capacity to create a new one. Many state laws provide broad protection for financial institutions that accept powers of attorney in good faith, consistent with the Uniform Power of Attorney Act (UPOAA). In addition, the UPOAA provides a safe harbor for a financial institution and other third parties that refuse to accept a POA. The protections apply when the third party believes that the person who holds the POA may be financially exploiting the person who granted it to them.

Advance directives: Advance care planning is the process people use to decide how they would like to be treated if they are no longer able to care for themselves. An advance directive lets these wishes be known. The directive also appoints someone else to make decisions on the person’s behalf if they are unable to do so. Advance directives include living wills, health care powers of attorney, and combined forms. Every state allows advance directives, but requirements vary by state. Advance directives executed in one state may not be valid in other states. Another problem arises when health care providers do not follow through on advance directives. Those without advance directives may have surrogates appointed to help determine care.

The Uniform Law Commission in 2023 drafted the Uniform Health-Care Decisions Act (UHCDA), a model law intended to modernize and expand upon the 1993 version of the act. The updated UHCDA includes many of the 1993 act’s provisions, including enabling people to both appoint agents to make health care decisions for them if they cannot do so for themselves and provide instructions to their health care professionals and surrogates on their priorities and preferences regarding treatments and interventions. The new model law includes updates that, among other things:

• Reduce barriers to creating advance directives;
• Clarify when a surrogate's powers commence by limiting the definition of incapacity, i.e., a person may lack capacity in some contexts yet retain capacity in others;
• Expand the default surrogates list to include a broader array of relationships and family structures; and  
• Authorize use of advance directives exclusively for mental health care.

Probate: Probate laws govern the transfer of property at death. They vary significantly by state. All estates, regardless of whether they include a will, are subject to review by state probate courts. However, without a will, probate is slower and more expensive. Moreover, it may not reflect the wishes of the person who died because it follows set formulas. The many variations and complexities of the probate process contribute to it being misunderstood. They can also make it challenging for a surviving spouse to navigate the legal landscape at a difficult time. A simpler probate system would facilitate the orderly transfer of property at death while also addressing other key issues. These include equitable assignment of costs, the need for qualified staff, and access to the courts for the resolution of disputes involving inheritance or debts of decedents. The Uniform Law Commission developed the Uniform Probate Code to simplify and clarify the probate system for the average consumer. Proper estate planning could also ease this process.

Some states have enacted legislation authorizing nonprobate transfers of real property using transfer-on-death (or beneficiary) deeds. The real property owner may deed the property to a named beneficiary. The transfer becomes operative on the owner’s death (avoiding probate) and is revocable until then.

Tangible assets are often the focus in probate. However, digital assets are increasingly important. These include e-mail, social media accounts, and photographs. In some cases, courts have not treated digital assets in the same way as tangible ones. In response to this problem, the Uniform Law Commission has approved the Uniform Fiduciary Access to Digital Assets Act. This would give executors and fiduciaries the authority to treat these digital assets in the same manner as tangible assets.