Estate Planning

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What is estate planning?

Why do I need an estate plan?

What does my estate include?

How do I name a guardian for my children?

What estate planning documents should I have?

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.

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The world's death rate has been holding steady at 100%. Of course, it’s not a matter of if you’ll die but when. It will be a lot easier for you to organize your estate while you are alive and well than to leave it to your loved to figure out after you die. 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.

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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

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If you have children under the age of eighteen, you should designate a person or persons to be appointed guardian(s) over their person and property. Of course, if a surviving parent lives with the minor children (and has custody over them) he or she automatically continues to remain their sole guardian. This is true despite the fact that others may be named as the guardian in your estate planning documents. You should name at least one alternate guardian in case the primary guardian cannot serve or is not appointed by the court.

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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.

There are generally two types of durable powers of attorney: a present durable power of attorney in which the power is immediately transferred to your agent (also known as your attorney in fact); and a springing or future durable power of attorney that only comes into effect upon your subsequent disability as determined by your doctor. Anyone can be designated, most commonly your spouse or domestic partner, a trusted family member, or friend. Appointing a power of attorney assures that your wishes are carried out exactly as you want them, allows you to decide who will make decisions for you, and is effective immediately upon subsequent disability.

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. 

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