Estate Planning
Many things are meant by the term estate planning, but a basic estate plan will involve planning for both pre-death issues and post-death issues. Additionally, you will need to consider legal issues, financial issues, and tax issues as part of your estate plan. While estate planning can become very complicated depending on your situation, it is highly recommended that you have a basic estate plan in place to protect you and your family.
A basic estate plan will generally involve the drafting of a will, durable power of attorney, advanced directive, designation of a heath care surrogate, applicable HIPAA authorizations, and a designation of pre-need guardian. A self settled, or revocable trust, is also a commonly used tool for estate planing, and may be a good idea depending on your situation.
Wills
Everyone should have a will, however, it is commonly misunderstood what exactly a will does. As most people know, a will is a way to say who will get your property after you die. What people often misunderstand is that a will is not a way to protect your property from the administration of estates process, or from your creditors.
In the administration of an estate, assuming that there is a will, the appointed personal representative will distribute your property according to your wishes. However, before any distribution can take place, creditors may be notified, and have a chance to collect on any outstanding debts that you may have owed prior to your death. This process can be lengthy, and there are ways to help speed up the distribution with other methods of planning. Also, there are ways to prevent your estate from falling into the hands of your creditors.
The reason that you should have a will is so that you can direct your appointed personal representative to carry out any wishes you may have for funeral services and burial, and as a back up measure in case you have property that you acquired and did not have a chance to plan for otherwise.
Revocable Trust
A self settled or revocable trust can be used to help speed up the distribution of your property upon death, and is also a helpful tool if you would like to have some control to distribute your property over time after you die. When you set up and fund this type of trust, it will typically be treated no different than if the property in the trust was yours personally. Generally, the person funding the trust will be the first named trustee, and all you will be doing is changing the names on accounts and shifting assets into the trust. Because you become the trustee, and the first distribution provision will be for your benefit, you can use the funds just as if no trust existed. The real benefit of a revocable trust comes into play when you die.
Upon death, the trust converts to a standard irrevocable trust. You will have designated a person or a professional entity to take over the trustee duties at that point, and the new trustee will be required to follow the terms in the trust document. You may simply direct that the trustee distribute the remaining property in trust outright, or you may opt to have the trustee pay distributions to certain beneficiaries over time.
There are a variety of different things that this type of trust can be used for, and you should consult with an experienced attorney to make sure a revocable trust is right for you. Also, you should be aware that a revocable trust will not give you protection from your remaining creditors, so there are certain situations where a revocable trust may not be advisable.
Durable Power of Attorney
A durable power of attorney may be used to grant authority to someone to act on your behalf, called the attorney in fact. You should strongly consider having a power of attorney to designate someone to manage your finances and property should you become disabled. By having a durable power of attorney in place, you can avoid lengthy and expensive guardianship proceedings for your loved ones. Like the other types of estate planning documents, there are various options in a power of attorney to consider, and you should discuss them with an experienced attorney to decide what is best for you and your family.
Advanced Directives and Heath Care Surrogates
Just like having an attorney in fact handle your finances and property, you will want to pick an individual to make heath care decisions for you in the event that you can not make these critical decisions yourself. You should consider many factors in selecting the person who will make your heath care decisions. If your heath declines, it can be a very stressful time for your family, and you want to make a plan that will help to avoid conflict.
You can also issue advanced directives about prolonging your life. If you put these directives writing, using the proper legal procedure, your heath care surrogate will not be able to override your decisions. You will want to specify if you do not want life prolonging treatment in the event that you have no significant chance of recovery. Many people do not want these life prolonging procedures, but do not use advanced directives, which can often lead to confusion and treatment that was against your wishes.
Designation of Pre-Need Guardian
Just in case you should every be the subject of a guardianship proceeding, you have the ability to file a form with the court to express your wishes in who you would prefer to be appointed guardian. Although the court is not bound to follow your request, it will be very strong evidence of who should get preference in being appointed your guardian. Hopefully, if you have a good estate plan, guardianship will never be necessary. However, the form is short, and can’t hurt to file.
I’m please to offer a basic estate planning package to my clients for a simple flat fee, plus and applicable cost. The basic estate plan includes a will, durable power of attorney, advanced directives, designation of heath care surrogate, HIPAA releases, and designation of pre-need guardian. Please see the Fees section for more details.
And as always, please call me with any questions you may have regarding your estate plan.
