No matter your net worth, every individual should have a personalized plan for his or her estate. Whether the issue is tax planning, division of assets, appointing an executor, naming guardians for minor children or planning for avoidance of probate, estate planning is the key to ensuring that your priorities and family values are addressed to your satisfaction.
The first step is to establish your goals. You certainly know the concerns which motivated you to plan, and an experienced attorney can assist you with identifying additional issues of which you may not even be aware. Your priorities might include one or more of the following:
• Providing financial protection for your surviving spouse
• Protecting inheritance for children (especially those from a prior marriage)
• Providing for minor children or grandchildren (especially disabled ones)
• Minimizing estate and income taxes
• Determining proper beneficiary designations for retirement plans, IRAs, annuities and life insurance policies
• Naming guardians for your minor children
• Keeping the business in the family
• Establishing trusts for professional management of your assets
• Preventing the loss of your assets to creditors and predators
• Ensuring that your charitable giving goals are perpetuated
The next step is to determine the most effective estate planning tools for achieving those goals based upon advice of experienced counsel. Your estate plan might include one or more of the following documents:
Will – The foundation of most plans, the Will appoints an executor to carry out your written instructions for the distribution of your estate at your death. The Will does not affect assets passing by beneficiary designations on life insurance policies and retirement plans or survivorship provisions on joint accounts. It is often appropriate to establish a trust under your Will to take effect, and be funded, at death for the protection of assets for certain beneficiaries.
Revocable “Living” Trust – A popular estate planning vehicle, the living trust is a document in which you can name yourself as the initial trustee and beneficiary. Assets re-titled in the name of the trust enable a successor trustee to manage those assets in case of your incapacity or death, without court involvement. Thus, the living trust tends to reduce the cost and delays of estate settlement, protect your family’s privacy and avoid conservatorship proceedings for the court-supervised management of your assets during disability .
Financial Power of Attorney – Everyone needs to have a person legally designated to manage affairs in the event of physical or mental incapacity, however temporary that condition may be. If you have not established and funded a living trust, the court will need to appoint a person as conservator to manage your resources and report each transaction on an annual accounting – unless you have a durable power of attorney naming an agent for these purposes. Powers of attorney should grant authority to perform a wide range of tasks, and special powers for gift tax planning, Medicaid planning, real estate transactions and coordination of health care services can also be included.
Health Care Power of Attorney – Distinguished from the financial power of attorney, this document allows another person to make all manner of decisions about your medical treatment if you are deemed physically or mentally unable to give informed consent for your treatment. Your agent will be able to authorize or refuse treatment, gain access to medical records, arrange for long term care and a myriad of other tasks on your behalf. Be sure to appoint an alternate agent as well. This document is sometimes referred to as an “Advanced Medical Directive”.
“Living Will” – The living will typically sets forth your desire that life-prolonging procedures be withdrawn or withheld in the event that you are diagnosed as being in a terminal condition or persistent vegetative state. You may customize this document to reflect your values or religious beliefs, and you may direct your health care agent to enforce the living will if necessary.