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Estate Planning Basics
Estate planning is for everyone 18 years old and older.
If you were to die without a Will, who would inherit your house? your car? your great grandfather's watch that your dad gave to you? If you and your spouse were both to die, who would take care of your minor children? If you don't address these issues in a Will, you will have no input in deciding these matters. Even though we hate to admit it or even to think about it, death is unavoidable, and because it's unavoidable, it makes sense to plan for it by preparing a Will or Trust.
Planning for incapacity is as important as planning for death. You could be involved in an accident or have a medical emergency, no matter your age. If you don't plan for incapacity, you could be put under guardianship or conservatorship in probate court. Medical and financial records and personal information would be available to the public. The simple pro-active solution is to sign legal documents now naming an agent or agents to make decisions about your person and finances in the event of your incapacity.
Estate planning helps you plan for death and incapacity. The main goal of estate planning is to plan for the care of your family and the orderly transfer of your property at death while achieving the maximum benefit of the law of wills, taxes, insurance, property, and trusts. A secondary goal is to plan for incapacity. While disability or long term care insurance can soften the financial blow of incapacity, legal documents signed while you are competent facilitate the decisions about your person and your finances that your loved ones will need to make in your stead. Not only does estate planning help your loved ones - it gives you peace of mind as well.
A Health Care Directive (sometimes called a Living Will or Health Care Power of Attorney) is a document which enables you to give instructions concerning your health care in the event you are not able to make health care decisions. In the Health Care Directive, you appoint others as health care agents to make decisions on your behalf under certain conditions and within certain guidelines. If signed when you're competent, it can avoid a guardianship proceeding in Probate Court.
A Power of Attorney is a document that appoints others to make financial decisions on your behalf when you are not able to do so. There are several kinds of Powers of Attorney, each authorizing an agent to act on your behalf under certain conditions and within certain guidelines. If signed when you're competent, it can avoid a conservatorship proceeding in Probate Court.
A Revocable Living Trust is a document that creates a way of owning property that doesn't end at your death or incapacity. To create a Trust, a person names himself or herself (and spouse, if married) as trustee. Ownership of most assets is changed to ownership by the trustee. In case of incapacity or death, a successor trustee takes over with no involvement by the Court.
A Will is a legal document signed by you, the testator, while competent, which overrides the state's default rules and controls what happens to your property upon your death. A Will is your written direction determining how all assets held solely in your name - your home, personal belongings, investments - are distributed at death. (Some assets pass outside your Will through beneficiary or survivorship designations, such as insurance policies, retirement plans, joint bank accounts, and real property held in joint tenancy with right of survivorship. These assets generally aren't subject to the provisions of the Will.) In your Will, you may also choose an executor, or personal representative, create testamentary trusts to support a spouse and children, benefit organizations that are important to you, and avoid misunderstandings among your heirs regarding your wishes. A Will is the last statement you get to make about your life and the tangible reminders of it. State law determines where your property will go if you die without a Will, or intestate. Your ideas about who should inherit your property at your death may differ greatly from the state's plan for intestacy.
Your estate plan should be reviewed and updated periodically. Appropriate times to review your estate planning documents are: when you add children to your family, when you marry or divorce, when you move to another state, when you receive an inheritance or retire, or every 10 years or so.
For additional information, please contact one of the Estate Planning attorneys at Henningson & Snoxell:
The content of this article is intended to be informational and is not to be construed as legal advice. Consult with an attorney regarding your specific circumstances.
