To protect your family and ensure your wishes are met. No one likes to think about the possibility of their disability or death. If you postpone planning for these events until it is too late, however, you run the risk that your needs will not be met or that your intended beneficiaries — those you love the most — may not receive what you would want them to receive.
This is why estate planning is so important even if you believe you have a small estate. It allows you, while you are still living, to ensure that your needs will be met and that your property will go to the people you want, in the way you want, and when you want. It permits you to save as much as possible on taxes and costs and it affords the comfort that your loved ones can mourn your loss without being simultaneously burdened.
My husband and I contacted Rob to assist with our estate planning based on a referral from a coworker. We had been putting off the task for a couple of years because who really wants to plan their demise, right? We were pleasantly surprised to find that Rob was very knowledgeable and easy to talk to which made the process simple and painless. I’m glad we were able to check off estate planning from our to-do list and I would absolutely recommend Rob to my friends and family.
The Components of a Good Estate Plan
Many people believe that if they have a will, their estate planning is complete, but there is much more to a solid estate plan. A good plan should be designed to avoid probate when possible, save on inheritance taxes, protect assets from potential nursing home costs, and appoint someone to act for you if you become disabled.
All estate plans should include, at minimum, three important estate planning instruments: a Durable General Power of Attorney, a Healthcare Power of Attorney and a Will. A Trust may also be useful to avoid probate and to manage your estate both during your life and after you are gone. In addition, an Advanced Directive or “Living Will” allows you to make healthcare decisions regarding what treatment you may or may not want at the end of your life.
A will is a legal document containing your directions as to who will receive your property at your death. If you do not have a will, there is a law that determines how your property will be distributed. In your Will, you will appoint a legal representative, called an Executor, to manage your estate and carry out your wishes. A Will is especially important if you have minor children because it allows you to name a guardian for the children.
A Trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for the benefit of another person, called a “beneficiary.” There are several different reasons for setting up a Trust. The most common reason is to avoid probate. Privacy concerns, continuity of care and time saving are also common reasons for selecting a Trust. Trusts can also provide tax advantages, control assets for those who require management of money, protect property from creditors, help one qualify for Medicaid or provide for those with special needs.
Common Trust include:
- Revocable Living Trust: this Trust enables you to avoid probate, maintain the privacy of your estate and save your heirs administrative time upon your death.
- Asset Protection Trust: this is a Trust that is built to protect your assets from creditors as well as from Long Term Care costs such as nursing home expense.
- Retirement Plan Trust: this Trust enables you to transfer your retirement savings to your heirs while protecting the funds from threats such as bankruptcy and divorce. It also enables your heirs to “stretch” the income taxes due on the funds over their lifetime rather than all at once.
- Special Needs Trusts: this Trust enables you to leave your estate to a special needs loved-one without disqualifying them from assistance that they may be receiving such as SSI and Medicaid.
- Pet Trusts: this Trust enables you to preserve a portion of your assets to ensure the care of your pet.
Power of Attorney
A power of attorney allows a person you appoint, your agent or “attorney-in-fact”, to act in your place when you are unable. The agent you name will be able to step in and manage your financial affairs and property. Without a Durable Power of Attorney, no one can manage your affairs without Court approval. The Court process takes time, is expensive, and the Judge may not choose the person you would prefer. In addition, under a Guardianship or Conservatorship, your representative may have to seek court permission to take planning steps that they could implement immediately under a simple Durable Power of Attorney.
Living Wills and Health Care Power of Attorney
A Healthcare Power of Attorney allows you to designate someone you choose to make health care decisions for you if you are unable to do so yourself. A living will instructs your health care providers what treatment you may want or not want when faced with an end of life situation. Without these documents, conflict may arise among families as to treatment decisions.
Non -Probate Property
Non-probate property, passes outside of the probate process and must be planned for separately. Jointly-owned property, property in Trust, life insurance proceeds and property with a named beneficiary, such as IRAs or 401(k) plans, all pass outside of probate and are not covered under a will. Non-probate property passes via operation of law or your beneficiary designation within the document(s).