Making an estate plan may not be at the top of your to-do list, but if you want to protect your assets and yourself, it should be. The consequences of delay could be dire.
Without an estate plan you could:
With an estate plan you can dictate your own medical and financial plan in the event of your untimely death or a medical situation where you are unable to communicate your wishes on your own.
A Will is the foundation of any estate plan. This document outlines what happens to your assets in the event that you pass away. It also gives you a chance to appoint a legal guardian for any children you have. Without a will, state law will determine how your assets are divided. An experienced attorney can help you think through the nuances of creating a will that accurately reflects your desires and complies with state laws.
However, a will is not comprehensive; other parts of your estate must also be addressed in your full estate plan.
A Revocable Trust or Living Trust is an instrument used for transferring assets to a legal entity (the trust). Frequently people put their home in a trust where they— or a corporation under their control— can continue to control the home until their death, but at which time ownership of the property automatically passes to the trust’s beneficiaries, typically the home owners’ children. A trust is effective as soon as it is made and can be changed throughout your lifetime. The living trust allows assets to skip the probate process that a will requires. Additionally, after a will is executed it is public property, making all of your assets public knowledge. This means a revocable trust is less time consuming and more private than just a will on its own. This cannot be done with a will alone.
However, if you only have a trust then there will be no plan for guardianship of children or dividing up belongings between heirs. A will is needed for that.
What happens to your assets if you are still alive, but unable to make decisions on your own? If you are in a coma, who is going to pay your mortgage, property taxes, and other bills on your behalf?
A Financial Power of Attorney allows someone to make financial decisions in your name if you are alive and unable to do so on your own. Without this document your family may face long and costly court proceedings before they are able to gain control of your assets. It’s important to delegate this responsibility carefully. Those with financial power of attorney are legally required to act in your best interest, but the laws cannot always stop them from acting in an unethical way.
A Health Care Power of Attorney authorizes a trusted individual to make medical decisions on your behalf if you become physically on mentally unable to make those decisions on your own. This person must be someone who you believe will carry out your wishes even if they are pressured to do otherwise.
A power of attorney does not need to go into effect right away. Often an estate plan will draft a power of attorney to go into effect only if specific conditions are met.
Alternatively, if you are unable to make healthcare decisions on your own you can include a Healthcare Directive or a Living Will in your estate plan. This document can detail your wishes for life-substaining treatment, including if you wish not to receive such treatment. A copy of this can be given to doctors and family members when it is needed to ensure that your wishes are met, even if you are unable to express them yourself. It also gives your family peace of mind, knowing decisions are being made that you would approve of.
The process of creating an estate plan can feel overwhelming. Each time life changes— whether it’s a birth, death, marriage or divorce— your estate plan should be updated. Whether it is to protect your business, your family, or yourself, an estate plan is necessary. While there are many online resources to create an estate plan on your own that seem convenient, they can never address the complexity of your personal situations. A visit with a professional estate planning attorney can make the process much smoother and ensure a plan tailored to your needs.
If you are ready to create your own estate plan, you can reach one of our experienced estate planning attorneys at Sumsion Business Law through the website or by phone today.