John Baker's Elder Law and Estate Planning Blog

Sunday, March 25, 2018

What is Estate Planning?

Estate planning is planning to manage your estate while you are alive and well, during anytime you are disabled or incapacitated, and at your death. Your plan should minimize taxes, legal fees and court costs as much as possible. It should also allow you to retain as much control over your affairs as possible while still achieving your desired goals.

Many people spend more time planning their next vacation than they do their entire life's estate. While nobody wants to think about death or disability, establishing an estate plan is one of the most important steps you can take to protect yourself and your loved ones.  Proper estate planning not only puts you in charge of your finances, it can also spare your loved ones of the expense, delay and frustration associated with managing your affairs when you pass away or become disabled.

Your estate is simply everything that you own, anywhere in the world, including:
• Your home or any other real estate that you own
• Your business
• Your share of any joint accounts
• The full value of your retirement accounts
• Any life insurance policies that you own
• Any property owned by a trust, over which you have a significant control

Estate planning can solve many issues, including:
• Provision for your loved ones and dependents according to your wishes
• Appointment of the person of your choice to manage your affairs in the event of your disability or incapacity
• Appointment of the person of your choice to make healthcare decisions for you in the event you are unable to do so because of mental incapacity
• Appointment of a guardian for a minor child
• Designation of your directives for healthcare, including end of life care
• Business succession
• Protections for your assets during your lifetime
• Protections for disabled beneficiaries and those with special needs
• Protections for the inheritances you give to your loved ones against their own misfortunes, divorce, creditors or lawsuits
• Minimizing taxes, legal fees and costs of administration of your estate

Many of us tend to think of estate planning as something for retired or older persons. However, anyone at any age could experience an accident, injury or illness that results in disability or death. Therefore, every adult should prepare an estate plan. The failure to plan could be costly and disastrous to you or your loved ones. As the saying goes, the failure to plan is a plan to fail.

A comprehensive estate plan should include the following documents, prepared by an attorney based on in-depth counseling which takes into account your particular family and financial situation:

A Will, also referred to as a Last Will and Testament, is primarily designed to transfer your assets according to your wishes. A Will also typically names someone to be your Executor, who is the person you designate to carry out your instructions. If you have minor children, you should also name a Guardian as well as alternate Guardians in case your first choice is unable or unwilling to serve. A Will only becomes effective upon your death, and after it is admitted by a probate court.

An alternative to a Will-based estate plan is a Living Trust. A Living Trust can be used to hold legal title to and provide a mechanism to manage your property. You (and your spouse) are the Trustee(s) and beneficiaries of your trust during your lifetime. You also designate successor Trustees to carry out your instructions in case of death or incapacity. Unlike a will, a trust usually becomes effective immediately after incapacity or death. Your Living Trust is "revocable" which allows you to make changes and even to terminate it. One of the great benefits of a properly funded Living Trust is the fact that it will avoid or minimize the expense, delays and publicity associated with probate.

If you have a Living Trust-based estate plan, you also need a pour-over Will. For those with minor children, the nomination of a guardian should be set forth in the Will. The other major function of a pour-over Will is that it allows the executor to transfer any assets owned by the decedent into the decedent's Living Trust so that they are distributed according to its terms.

A Durable Power of Attorney for Property allows you to carry on your financial affairs in the event that you become disabled. Unless you have a properly drafted power of attorney, it may be necessary to apply to a court to have a guardian or conservator appointed to make decisions for you during a period of incapacitation. This guardianship process is time-consuming, expensive, emotionally draining and often costs thousands of dollars.

The law allows you to appoint someone you trust to decide about medical treatment options if you lose the ability to decide for yourself. You can do this by using a Durable Power of Attorney for Health Care or Health Care Proxy where you designate the person or persons to make such decisions on your behalf. You can allow your health care agent to decide about all health care or only about certain treatments. You may also give your agent instructions that he or she has to follow. Your agent can then ensure that health care professionals follow your wishes. Hospitals, doctors and other health care providers must follow your agent's decisions as if they were your own.

A Living Will, sometimes referred to as an Advance Healthcare Directive,  informs others of your preferred medical treatment should you become permanently unconscious, terminally ill, or otherwise unable to make or communicate decisions regarding treatment. In conjunction with other estate planning tools, it can bring peace of mind and security while avoiding unnecessary expense and delay in the event of future incapacity. Not everyone wants a Living Will, and there is debate about their effectiveness, but if you have specific directives that you want to make, you have the legal right to do so in a Living Will. 

If you have not planned your estate or may need to update your current estate plan, please contact us to schedule a consultation. We welcome the opportunity to help you make sure that your estate plan is a success.

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PO Box 10556, 222 Heritage Park Drive, Suite 104, Murfreesboro, TN 37129
| Phone: 615-896-5621

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John H. Baker III, and the law firm, BakerCounsel Law, are located at PO Box 10556, 222 Heritage Park Drive, Suite 104,, Murfreesboro (Rutherford County), TN 37129. Surrounding communities include Smyrna and LaVergne (Rutherford County), Franklin and Brentwood (Williamson County), Woodbury (Cannon County), Manchester and Tullahoma (Coffee County), Lebanon (Wilson County) and Shelbyville (Bedford County).