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What estate-planning documents are necessary?

What estate-planning documents are necessary? © iStock

If an individual dies without a will, his or her estate will be disposed of pursuant to state laws that may not meet that individual’s estate-planning goals. If an individual becomes incapable of managing his or her affairs, a court proceeding is then necessary, to appoint someone to care for the person and/or his or her property. These proceedings can be time consuming, expensive and intrusive. Alternately, the following instruments allow the individual control of his or her person and property.


A will disposes of a person’s property in accordance with his or her wishes. Although a will, which is public, takes effect on death, it may be revoked or changed by codicil or subsequent will. Probate is the judicial process proving that a will is valid. The property involved is probate property and generally includes anything the decedent owned individually, or as a tenant in common, and his or her share of community property.


Through a trust, an individual, called the grantor or settlor, transfers property to a trustee to manage, invest and administer for the benefit of the designated beneficiaries. A trust can be created during the grantor’s lifetime, making it a living trust, or on the grantor’s death, by his or her will, making it a testamentary trust. In contrast to a will, a trust is private. A revocable trust may act as a will substitute and, because a trust is a private agreement, assets already in the trust at the time of death will then avoid the probate process.

If an individual dies without a will, his or her estate will be disposed of pursuant to state laws.


Through a power of attorney instrument, a person (the principal) appoints another person (the agent) to act on the principal’s behalf with respect to any or all of the principal’s property. A power of attorney can be “durable,” so that it survives the principal’s incapacity or disability. It can also be effective upon execution or, if the individual is reluctant to grant immediate powers over his or her property, can “spring” into effect at a specified future time or upon the occurrence of the principal’s incapacity or disability. Unlike a revocable trust, a power of attorney’s effectiveness generally ceases at the principal’s death.


With a healthcare directive, an individual (the principal) grants another person (the agent) the authority to make healthcare decisions in the event of incapacity.


With a living will, an individual expresses his or her intent or preferences with respect to healthcare matters. The healthcare agent must then act in accordance with the principal’s wishes.


An estate plan commonly employs all of the above tools. A revocable living trust can govern the management and disposition of property on death, or during incapacity. Wills and powers of attorney are still necessary to deal with assets not placed in such a trust.

For healthcare matters, an individual can empower an agent with a healthcare directive to make healthcare decisions on his or her behalf, and a living will can serve as a guide to the healthcare agent.

Jeffrey S. Gerson and Shawn P. Landau are financial advisors with the Wealth Management division of Morgan Stanley in New York City. The views expressed herein are those of the authors and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, member SIPC, Morgan Stanley Financial Advisors engaged Worth to feature this article. Gerson and Landau may only transact business in states where they are registered or excluded or exempted from registration Transacting business, follow-up and individualized responses involving either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where Gerson and Landau are not registered or excluded or exempt from registration. Morgan Stanley Smith Barney LLC offers insurance products in conjunction with its licensed insurance agency affiliates. Morgan Stanley and its financial advisors do not provide tax or legal advice. Individuals should seek advice based on their particular circumstances from an independent tax advisor. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER and federally registered CFP (with flame design) in the US. CRC1383921 01/16

This article was originally published in the February–April 2017 issue of Worth.

Trust & Estate Planning

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