We believe estate planning is having a plan in place, that provides peace of mind and confidence to know:
That I will be able to control my property, as I see fit, while I am alive and well.
That I have a plan for me and my loved ones if I become disabled
That when I die, I know that I will be giving my property: To Whom I want, When I want, The Way that I want
All while assuring that my Wisdom is transferred along with the rest of my wealth.
This definition removes the focus on any specific document to ensure that ALL of one’s goals are addressed when dealing with a disability or a death while providing clarity of one’s intent and supplying specific instructions to care for oneself and his or her loved one’s. Finally, part of an effective estate plan involves maintaining good relationships with professional service providers within our community. Through these relationships, we want to ensure all clients have access to these service providers that will be able to assist and guide them through the present and future.
FOUR STAGES OF ESTATE PLANNING
Another way to look at how we approach estate planning is to consider the four stages to one’s estate and the several issues that need to be considered during each. No one will have the same needs or challenges during each stage, but proactive planning can minimize or eliminate the issue and address the need. The stages are:
1. Alive and Well
While you are alive and well, it is understandable that you will want to maintain control of your personal effects and financial assets. Thus, an estate plan should afford you the ability to:
- Access your money when you need it
- Make your own decisions about your health care needs
- Determine where you’ll live, according to your lifestyle preference
- Select the specific individuals (or helpers) that will assist you in the event that you cannot care for yourself or manage your assets
- Make changes to your legal documents
Mental disability is a major concern for everyone. It is an unknown that needs to be thoroughly and thoughtfully explored. Your estate plan should address the following questions:
- Is there a history of medical conditions that have afflicted your family?
- How could your lifestyle change?
- What quality of care do you desire or prefer?
- Who will be around to make the decision if you’re disabled? Whom do you prefer?
- Have you left information on the assets that you own?
- Do any of your assets provide financial assistance during a disability?
- What are non-negotiable instructions that you need to leave?
3. Death and Avoiding Probate
After the death of a loved one, it is incredibly difficult for families to deal with the unknowns that arise. While grieving, the greatest gift you can provide will be to ensure that they have the resources necessary to help them navigate the uncharted territory. It is important to confirm that your estate plan meets even your baseline goals, by understanding the following:
- Will your estate plan avoid an unnecessary probate?
- How does your estate plan minimize or avoid federal, state, and local income and estate taxes?
- Is there a plan to assist your family with avoiding the “morbid scavenger hunt” of locating your assets?
- Is your family aware of any financial professionals (CPA, financial advisor, business attorney) that can assist them with your final affairs?
- Does your family understand the after-death process associated with your estate plan and how to pay for it?
4. Wealth Reception (Protecting the Inheritance)
Most inheritances, regardless of their size, are quickly exhausted. It is important to evaluate the goals and expectations you’ve set for your beneficiaries. Thus, your estate plan should thoroughly examine the recipient and evaluate the following potential outcomes:
- Does your beneficiary have special needs that will require additional or lifelong assistance?
- Could the inherited assets be squandered by a beneficiary through reckless spending?
- Could a catastrophic creditor, such as a lawsuit from a car accident, a bankruptcy filing, bad business decisions, etc., threaten your beneficiary’s ability to fully use the inherited assets?
- If your beneficiary is married, could a future, unexpected divorce result in your assets being court appointed to an ex-spouse?
- You can leave a lasting legacy for your family by simply taking the time to thoughtfully plan your estate, and supplying your loved ones with the tools to allow the gift to last generations.
“THE TOOLS” - FIVE ESSENTIAL ESTATE PLANNING DOCUMENTS
It is important to remember that when you go to a contractor to have a house built or something redesigned in your home, you give the contractor your vision. You don’t tell them what tools to use to accomplish your vision, you leave that to the professionals. Estate Planning is the same way. Tell a trusted attorney what your vision is, and they will provide you with the tools to make sure your goals are accomplished.
It’s not about the documents. The documents are a means, but it is more involved and a living breathing document that likely will need to be changed and adjusted over time. Although each document may address a specific aspect or time period in one’s life, they are interdependent and a complete and comprehensive estate plan will include each of them. The five “tools” we use are:
1. LAST WILL AND TESTAMENT
A document that lays out your wishes and instructions on how and to whom your financial assets and personal property shall be distributed in the legal process known as probate. Yes, you read that correctly, a Will is only useful in the probate court. A Will does not avoid the
probate process. The Will is used to advise the judge on how your assets are to be distributed. Without it, the judge will rely on the state statute for clarity but will use his or her own discretion if there is uncertainty.
2. POWER OF ATTORNEY FOR FINANCIAL MATTERS
If you’re unable to handle financial or legal matters due to a mental or physical disability, a financial power of attorney allows you to appoint a trusted individual (or helper) to do so on your behalf. Obtaining this legal document allows you to remain in control of the financial management of your assets, by naming someone you trust to make those decisions and avoiding a court-appointed guardian or conservator. However, this document by itself is insufficient. It merely provides broad authority to carry out any financial act necessary. It does not provide personalized instructions on how to use the authority granted.
3. POWER OF ATTORNEY FOR HEALTHCARE
If you’re unable to make or communicate medical decisions for yourself due to a mental impairment or physical limitation, a healthcare power of attorney allows you to appoint a trusted individual (or helper) to do so on your behalf. Failure to create a Healthcare Power of Attorney will result in the Court evaluating and determining the appropriate helper. Similar to obtaining a financial power of attorney, obtaining this legal document allows you to remain in control of decisions relating to your health, avoiding a court appointed guardian or conservator.
4. ADVANCED MEDICAL DIRECTIVES / LIVING WILL
A Living Will allows you to indicate your end-of-life preferences on whether or not to be prolonged with artificial nutrition and hydration, as well as your decisions on pain management, mechanical ventilation, organ donation, and in some states, resuscitation. This document allows you to document your decision ahead of time in the event you are unable to communicate.
5. REVOCABLE LIVING TRUST
A Revocable Living Trust, if properly drafted, provides specific instructions on how one’s financial and personal property (nonfinancial assets) are handled during a period of disability, after a death, and how the inheritance will be received and used by the ultimate beneficiaries. It can be drafted to minimize or avoid federal, state and local taxes. Although it is often praised as a legal document that will avoid probate, people frequently fail to take the actions necessary to realize that outcome. Lastly, an often-overlooked benefit of a Revocable Living Trust is the ability to create a plan that can prevent threats to the inheritance and provide detailed, personalized instructions on how the inheritance is used and transferred. A Revocable Living Trust is one of the most powerful estate planning tools that one can use to provide for and create generational wealth.