Estate Planning is about much more than simply who gets your “stuff” when you pass away. It is also about topics ranging from health care, to real estate, to government benefits, to taxes. And each relevant topic could have an effect on your estate, either before or after you, or your loved one, pass away. Because an estate plan frequently has many moving parts with wide-ranging effects, it is important to ensure that in developing your estate plan, you are provided with professional advice, and also complete advice. Often a complete estate plan has input from an attorney as well as various other professionals, including, but not necessarily limited to, a certified public accountant (CPA) or other tax professional, and a certified financial planner (CFP).
The possible components of an estate plan may include:
A will (or ‘Last Will and Testament’) is the traditional property distribution document, and most people are familiar with the idea of a will. In a will, in addition to naming persons to inherit your property, a person also appoints a person who will handle their probate estate, known as a Personal Representative (commonly referred to as an ‘executor’). Frequently, people with minor children appoint a guardian and conservator for their children, and may also include a testamentary trust for their children or others in the will. Each section and nomination in a will must work with the others, and for that reason it is important to have an attorney assist with its drafting.
A revocable trust (or variously ‘living trust’, ‘revocable living trust’, etc.) is the most commonly used tool for probate avoidance. Probate, although not ‘the end of the world’, so to speak, can be an expensive and lengthy process. It is also a public process. So, many people who are interested in avoiding probate and in keeping their estates private frequently pursue a revocable trust.
A revocable trust is a trust which, as its name suggests, is revocable and amendable by its creators. Its creators (known as settlors or trustors) almost always serve as trustees until they die, at which time a successor trustee takes over and administers and distributes the trust estate. The trust changes, as a matter of law, the way a person owns many or all of their assets; however, frequently there is little change in the way that a person uses or enjoys those assets. The key to a revocable trust is funding the revocable trust. Those assets that are properly placed into the trust should pass outside of probate.
GENERAL DURABLE POWER OF ATTORNEY
A general durable power of attorney is a document by which a person nominates an agent to act on their behalf as to their property, finances, and assets, either concurrently with them or upon their disability. Most often, the power of attorney is a tool intended to allow for the management of a person’s estate should they become incapacitated often without the need for a guardianship or conservatorship.
PATIENT ADVOCATE DESIGNATION
Similarly to a power of attorney, a patient advocate designation nominates a person to make health care decisions for a person if the person cannot do so due to incapacity. A patient advocate designation also frequently provides instructions relating to circumstances such as comas, vegetative states, and terminal illnesses, and under what circumstances life-sustaining treatment should be withheld.
OTHER DOCUMENTS & NON-PROBATE TRANSFERS
Other documents can be used to accomplish other estate planning goals. For example, a special needs trust can be used to provide for a child or relative with a disability while still protecting their ability to obtain certain government benefits, and can also be included in a will (as a testamentary trust) or within a revocable trust (as a continuing trust). Deeds can be used to create various effects in relation to real estate, including potentially avoiding probate under certain circumstances, or to transfer property to a trust. Various estate planning tools can also be used for late-life planning, such as for Medicaid, or for other goals, such as asset protection. Also, an attorney can provide advice as to how a client should hold his or her assets; many assets can pass outside of probate by establishing beneficiaries or another mechanism by which the asset will pass.
If you would like to discuss a new estate plan or changes to an existing estate plan, call us today.