What’s involved in an estate plan?
Last Will & Testament
The fist thing that comes to mind for most people is a Last Will & Testament. A Last Will is a document that outlines how you want for your assets to be distributed upon your death. In distributing your estate, a Last Will can make gifts of your assets outright to your heirs, or it can call for the establishment of a trust for your heirs. A Last Will can also designate who should serve as the guardian of your minor children. The only downside to a Last Will is that your heirs will have to take it through the probate process, which can be costly. The remedy to this issue is to have a revocable living trust.
Revocable Living Trust
A revocable living trust is a trust that, as its name suggests, is completely revocable. It is a type of trust that you create during your lifetime. Once your revocable living trust is formed, you will place most of your assets into it. During your lifetime, you can use the assets in your revocable trust however you wish. You can take the assets out of the trust or even completely renounce and terminate the revocable trust at any time. Once you pass away, however, your revocable living trust will become irrevocable, and the assets inside the trust will be distributed to the people you have named as trust beneficiaries, the assets will continue to be held in trust for the benefit of your beneficiaries, or some combination of the two. The main benefit of a revocable living trust is that it allows your estate to avoid probate court, which will save your loved ones time and money and lessen the burden of administering your estate. Any assets that you have not properly put into your revocable trust will be placed into the trust by virtue of a Pour-Over Will, which is a specialized type of last will and testament that also bypasses the onerous burdens of probate court and can probated in a simplified and very quick summary administration.
Power of Attorney
A Power of Attorney is an essential part of your estate plan, because it allows a designated individual to make important decisions for you in the event that you are medically incapacitated or otherwise unavailable to make important decisions. A Power of Attorney will allow your appointed representative to make business and financial decisions for you. For example, the holder of your Power of Attorney can continue paying your mortgage, healthcare costs, and other ongoing expenses from your bank account if you can’t do it yourself for any reason. A Power of Attorney also allows the holder to file tax returns on your behalf and can even permit the holder to make important decisions pertaining to your investments, which could allow you to avoid financial ruin. In short, a Power of Attorney is one of the most important documents you can have in your estate plan, because it spells out exactly who you want to make decisions on your behalf to what extent they are empowered. Thus, a Power of Attorney provides certainty and structure for your loved ones when they might need it most.
A Healthcare Surrogacy is a document that appoints a person to make healthcare decisions for you in the event that you are unable to communicate your desires. Similar to the holder of a Power of Attorney, the purpose of appointing a Healthcare Surrogate is to remove uncertainty, confusion, and infighting among your loved ones if you are too ill to make your own medical decisions. The media has shown multiple examples of families falling apart because of the lack of a Healthcare Surrogacy. The idea is to clearly express your wishes to your Healthcare Surrogate so that all you can receive the type of care that you want without exception and without the need for your family to suffer unnecessarily.
A Living Will is a document that expressly states how you want to be treated in certain scenarios. For example, your Living Will can state what you want to happen in the event that you are in a coma and terminally ill. Would you want your family fighting over whether to “pull the plug” in that scenario? Of course not, and you can avoid that outcome by making your wishes legally enforceable in a Living Will. Your Living Will addresses multiple scenarios and even allows you to determine whether you would like to undergo experimental medical procedures that might save your life and whether you want to be an organ donor. It goes without saying that a Living Will is an integral part of your estate plan.
The goal of estate planning is to give your loved ones clarity about your wishes so that there is no room for uncertainty or disagreement within your family if you ever become incapacitated or upon your passing.
While estate planning is typically described as the process of putting a legal strategy in place to “get your affairs in order,” we like to think of it as more akin to cleaning out your garage. It is the process of figuring out what you have, where you have it, and where you want it to be and eventually go. The tools typically used to give legal effect to these decisions are Wills, Trusts, Power of Attorney, and Healthcare Directives.
With a proper legal strategy in place, you can empower your loved ones to act according to your wishes, and you can aid your family in avoiding the expense of unnecessary taxes and the hassle of a prolonged probate process. An effective estate plan addresses each of these issues, in addition to making sure that your family has absolute clarity about your wishes and desires and about the management of your affairs, if you should ever become profoundly incapacitated.
Modern estate planning includes developing plans for who you want to care for you and make decisions for you in the event of your incapacity, how you want your health, business, and personal affairs to be handled, and how you want your physical and even your digital assets controlled, used, and distributed upon your death.
In short, an effective estate plan will give you peace of mind in knowing that your loved ones will have clear direction without the need to guess about what you “would have wanted.” It will also provide for the needs of your family while giving them a sense of security and certainty in what will surely be an otherwise difficult time. Finally, an effective strategy will allow your family and your estate to avoid many of the expenses and headaches that so often get piled on top of grieving for a lost loved one.
We are here for you to guide you through your estate planning process. Call us at 954-384-6114 or contact us to begin the process of developing a custom estate plan to address your particular needs and wishes.