Estate Planning
Estate planning is a process that involves people – your family, other individuals, and in some cases, charitable organizations. It also involves your assets (property, real and personal). And estate planning addresses your future needs should you ever become unable to care for yourself.
Through estate planning, you can determine:
- How and by whom your assets will be managed for your benefit during your lifetime if you ever become unable to manage them yourself;
- How and to whom your assets will be distributed after your death;
- How and by whom your personal care will be managed and how health care decisions will be made during your lifetime should you become incapacitated;
- Who will care for your minor children in the event of your death or incapacity;
- What will be done with your remains after you die;
- And more.
Do I need estate planning?
Yes! Everyone can benefit from some level of estate planning, whether your estate is large or small. At the very least, you can designate responsible individuals to 1) distribute your assets upon your death; 2) make health care decisions on your behalf in the event you become unable to do so yourself, and 3) care for your minor children should you become unable to do so.
COMMON ESTATE PLANNING DOCUMENTS
Living (Revocable) Trust
A living trust is called living because it is created while you are alive; with a living trust, you legally transfer property to the trust when you create it. And it is also called revocable because you can revoke or change it at any time, for any reason, before you die. While you live, you effectively own all the property you have transferred to your living trust and can do whatever you want with it, including selling it, spending it, or giving it away.
The benefits of a living trust:
- Avoid probate
- Very flexible
- Not public record
- Can plan for incapacity and avoid conservatorship proceedings (also a time-consuming and expensive procedure)
- Can be creative with inheritances distributing assets to beneficiaries in installments, when they reach certain ages, etc. useful with blended families, special needs children, financially irresponsible beneficiaries, etc.
- No serious drawbacks or risks in creating or maintaining a trust. (Unlike other trusts, there is no need to obtain a taxpayer ID # or maintain separate trust tax recordsunless you are not the trustee of your own trust.) See Tax Issues for more information.
Pour-Over Will
If you have a living trust, your will is often referred to as a pour-over will. A pour-over will directs that remaining property not included in the trust will be poured over into the trust upon your death. Your will can also appoint guardians for your minor children should you become unable to care for them. If you do not have a guardianship provision, a judge will make that determination for you.
Durable Power of Attorney for Assets
With a durable power of attorney for assets (finances), you give another person authority to manage your financial affairs if you become incapacitated, thereby avoiding expense and potential conflict of a conservatorship proceeding in the event of incapacity. This power of attorney cannot replace a living trust because, among other things, it expires upon death.
Advance Health Care Directive
An “Advance Health Care Directive” includes both health care declaration and a durable power of attorney for health care. A health care declaration provides your wishes about life support and other kinds of medical treatments. It takes effect if you cannot communicate your own health care wishes. In a durable power of attorney for health care, you appoint another person to make medical decisions on your behalf in the event you become unable to make those decisions yourself.