Estate Planning Questions
What is Estate Planning?
Good estate planning is more than just simply drafting a will. Estate planning also minimizes potential taxes and fees and sets up contingency plans to make sure your wishes regarding health care treatment are followed. On the financial side, a good estate plan coordinates what will happen with your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan), and other property in the event you became disabled or in the event of your death.
Who should have an estate plan? You should have an estate plan if:
→ You are the parent of minor children
→ You have property that you care about
→ You care about your health care treatment
What are some typical estate planning documents?
Several of the following documents are typically used as part of the estate planning process:
- Will (sometimes called a "Last Will and Testament") is a written instrument containing directions on how your property shall be divided on your death. A Will also typically names someone to be your Personal Representative (or "Executor/Executrix") to carry out your instructions and also names a Guardian if you have minor children. A Will only becomes effective upon your death. A Will is not officially recognized until the court having jurisdiction over the instrument declares it to be a valid Will. The process by which a court determines whether a Will is valid is known as probate.
- Durable Power of Attorney for Health Care (also called an Advance Health Care Directive) is a document that appoints a person to make decisions regarding your health care treatment in the event that you are unable.
- Living Will is an instrument that gives doctors and hospitals your instructions regarding the nature and extent of the care you want should you suffer permanent incapacity, such as an irreversible coma. This concerns life support services of various kinds, from respiratory assistance to feeding tubes.
- Durable Power of Attorney for Property is an instrument that appoints a person to act for you and handle financial matters should you be unable or perhaps unavailable to do so.
- Living Trust is an instrument that can be used to hold legal title to and provide a mechanism to manage your property. You can select the person or persons you want (often yourself) as the Trustee to carry out the instructions you have set out in the Trust. You can name one or more Successor Trustees to take over if you can no longer act. Unlike a Will, a Trust usually becomes effective immediately, continues in force during your lifetime, even in the event of your incapacity, and continues after your death. Most Trusts are "revocable," which allows the person who creates the Trust to make future changes, modifications, and even to terminate it. If the Trust is "irrevocable", changes, modifications, and termination are very difficult and sometime impossible, although such Trusts often carry some tax benefits. Trusts also help you avoid or minimize the expenses, delays and publicity of probate.
Why should you use an estate planning attorney?
Only an estate planning attorney who regularly practices in the fields of wills, trusts, probate and estate planning is able to provide you with really sound legal advice as you put your estate plan into place. The expense incurred in retaining an estate planning attorney to prepare and help you put an estate plan into place is worth hundreds of times what you and your family would pay with no planning or poor planning. It would also avoid the financial and emotional nightmares that can occur with a poorly drafted (or improper) plan.
Whom Can I Choose As The Guardian Of My Minor Children?
You can designate anyone you wish to be a guardian for your minor children as long as the designated person is an adult and legally fit to be a guardian for minor children. The guardian does not necessarily have to be a family member. However, after you are gone this person will be legally responsible for your minor children until they reach the age of majority. The guardian can be a man or a woman, and you can designate more than one person (e.g., a married couple). Most importantly, you should feel comfortable putting your children in the guardian`s care should the need arise. You specify your guardians in you Will, like you would specify your personal representative or executor. You can even choose the same person to be both the executor and the guardian of your children.
If I Set Up A Living Trust, Do I Still Need A Will?
Yes. A Will serves as a back up for assets that you either don`t or are not able to transfer to your Living Trust. Any asset not transferred to the Trust will not pass under the terms of the Trust document. If you don`t have a Will, any asset that isn`t transferred by your Living Trust will go to your closest relatives in an order determined by state law. These laws may not distribute your assets in the way you would have chosen. A Will can ensure that your assets that are not covered under the Trust are distributed according to your wishes.