Estate Planning

Estate Planning: often avoided because, “Estate planning is too confusing” or “I don’t have anything to leave behind.”  By having an estate plan, however, one offers one’s family members peace of mind during a difficult period.

The four main documents in an estate plan are: Will, Trust, Durable Power of Attorney for Finances, and Advance Directive for Health Care.

A Will is the legal instrument that permits a person to make decisions on how their estate will be distributed after death.  Without a Will, State laws dictate how the estate is distributed.  A Will does not avoid probate (the court-overseen process for distributing a person’s estate); however, it will ensure your assets are distributed to the people you desire.

One of the simplest ways to avoid probate is through a Trust. The three main “players” in a Trust are the Settlor (the person who’s trust it is, i.e. you), Trustee (the manager of the trust), and Beneficiary.  In a conventional living Trust, the Settlor, Beneficiary, and Trustee are initially the same person. It is only when the Settlor (you) becomes unable to handle their own financial affairs that a successor Trustee (chosen by you) takes over the management of the Trust. The Trust assets are used for your benefit, with the remainder beneficiaries receiving an interest in the Trust only after your death (the way your estate passes under a Will).

The Durable Power of Attorney for Finances (DPA) names the person responsible for managing non-trust finances in the event you are unable to manage them yourself.  Even in a Trust-centered estate plan, the DPA plays an important role, governing the assets held outside the Trust.  In the event of your incapacity, your successor Trustee will take over and manage your Trust assets while your agent under the DPA will manage all non-trust assets.

An Advance Directive for Health Care allows you to name an agent to speak with the doctors and make health care decisions for you if you are unable to make them on your own.

When properly drafted, an estate plan is a powerful tool not only in the event of person’s death, but also during the person’s life.  When deciding on a professional to assist you in drawing up your estate plan, be sure to choose someone who specializes in this area of law, so that your plan works effectively not only after your death, but during your life as well.

Estate plans are designed to grow and develop as we do and should be reviewed periodically.  I recommend reviewing your plan on an annual basis – you may not need to change it each year, but looking at it each will help keep it fresh in your mind, as well as help ensure any necessary changes are caught and addressed quickly.