Estate planning is an important area of practice for our law firm, and we are committed to helping individuals and families with these issues. Over the course of the last year, attorney Rene Millner has written several in-depth articles on the specific documents that make up an estate plan, types of estate plans, and other considerations in estate planning. In this article, we again explain the basic components and considerations in a person’s estate plan. More importantly, this article reminds all of us what estate planning can do for an individual and for that person’s family members.
Uncertainty in life is certain, right? While we may know that we’ll enjoy a few too many holiday cookies this year, there are many things we don’t know and for which we cannot be certain. Important things such as how long we will live, how healthy we will be, how many grandchildren will we have, or where we may live for the final years of our life. What will be our legacy after we are gone?
Estate planning can help address uncertainty. The goals of a well-crafted estate plan are several. First, an estate plan names and authorizes the individuals who you want to act on your behalf in financial and medical matters during your lifetime. Second, an estate plan sets forth how your financial assets, real estate, and other valuables are to be distributed when you die and who oversees this process. Third, an estate plan should be designed to minimize stress, complications, and costs at the time you pass away. An estate plan should give you peace of mind, and lastly, it should reflect who you are and what your legacy is to be.
An estate plan is made up of several documents, and these include a power-of-attorney, a health care directive, a will, and in many cases a trust. Titling assets and beneficiary designations are also part of the estate planning process. Of course, talking to your spouse and family members is also very important.
By appointing an attorney-in-fact, you can give your spouse or another trusted person the authority to act on your behalf in financial, business, legal, and real estate matters. An attorney-in-fact can ‘step in the shoes’ of the principal and sign documents and take other actions on their behalf. An appointment can be broad or narrowly tailored for each situation, and it’s especially useful for unexpected events. An attorney-in-fact can make sure the bills get paid, checks deposited, and the heat stays on. For a business owner, it’s especially important to appoint a trusted individual who can make sure the business stays open.
A health care directive is a similar document, and it allows you to appoint a person to act on your behalf when it comes to health matters and medical decisions. Your appointed health care agent has the authority to speak to your health care providers, communicate your wishes, consent to or decline medical treatment, and access to your medical records. At all times of our lives, whether we are young or old, this is an important document to have in place.
A will, of course, tells the world who you want to receive your assets when you pass away. In your will, you name a personal representative to oversee the administration and distribution of your estate. Your will should set forth a distribution plan for your estate and name those who are to receive your assets, such as your spouse, your kids, grandkids, other family members, friends, or charitable organizations.
Many estate plans include a trust document which allows you to convey title of assets out of your name and into the name of the trustee to be held for the benefit of named beneficiaries. In many ways, a trust functions like a will because it appoints the person, a trustee, to be in charge of the trust when you no longer can be or when you pass away. A trust also sets forth a distribution plan for the assets governed by the trust. A trust allows you to distribute assets at the time of your death or later when beneficiaries reach a certain age.
One of the primary benefits of a trust plan is to avoid probate and protect privacy. There are many other benefits to a trust plan and just as many types of trusts. A trust plan is particularly useful in families with children from previous relationships, children with special needs, larger estates facing estate tax liability, and for business owners.
So why is an estate plan a gift to your family? An estate plan addresses and resolves at least some of the uncertainties we face in life. A well-drafted estate plan, one that is designed and tailored for your situation, should answer questions, eliminate fears, and lessen worries for you and your family members. It should also reflect your values and shape your legacy after you’re gone. Lastly, having your estate plan done will give you and your family members peace of mind during this season of giving.
Please send any request for topic suggestions to firstname.lastname@example.org. Although we cannot give you legal advice through the column, we can provide some general information that may be helpful for you to know. Our purpose is to educate and we hope that you can take something new away from this column each time you read it.