Big or small, everyone has an estate made up of all the things they own. So, what do you do with all that stuff when you kick the bucket? As they say, “you can’t take it with you when you go.” That’s where estate planning comes in. Like it or not, everyone has an estate plan, it’s either the one you make up with your personal instructions, or the ‘one size fits all’ estate plan that your state government has established by law. Most people would prefer the one you establish with your instructions.
A comprehensive estate plan is a set of documents made beforehand that provides directions not only if you die, but also if you become incapacitated and cannot manage your personal affairs, namely, finances, and health care. The main documents in such an estate plan include, a will, durable power of attorney, health care power of attorney, living will and a HIPPA form. Often times an estate plan will also include a revocable living trust.
Most people are familiar with a last will and testament, but it is not quite what the movies make it seem. In a will, you can specify your wishes, but if a will is all you have, your estate will not avoid probate. That means your certain assets will go through the court system and be reviewed by a probate judge (which can be a very lengthy process) before they can be distributed to your intended beneficiaries. This is made more complicated if you own property in multiple states and may result in an expensive and difficult situation for your family. Additionally, it is in the will that your executor is named, and if you have a minor child(ren), then a guardian is identified to care for the child(ren).
The durable power of attorney is used when a person is incapacitated and cannot function on their own to manage their personal/financial affairs. This gives instructions to the person or persons selected to carry that responsibility.
The health care power of attorney, is used again when a person incapacitated and cannot make health care decisions. They may need a particular surgery and not understand why or what is needed. This happened when my mother needed her appendix removed when she had Alzheimer’s.
The HIPPA Form allows for open communication between the medical professionals, and facilities, and the caregiver(s). Otherwise with healthcare privacy laws the caregiver may not be able to obtain information about their loved one.
You should also have a living will. This is where you can express your desires for medical treatment or other health care directives should you be incapacitated. It allows you to speak for yourself through your written wishes, instead of relying on what other people may want or choose. A living will may also include any end-of-life directions.
A will is only one option you can use when planning the distribution of your assets. Many people utilize a revocable living trust, giving them more control in how their wishes are carried out as well as protecting their family from having to endure the arduous and public probate process. A trust can be a very useful tool in protecting your hard-earned assets from being frivolously spent after your passing.
Estate plans can be complex. You want to make sure it’s done correctly and provides for your loved ones the way you intend. Because of some of the complex tax and legal considerations, it’s always a good idea to consider using an estate planning attorney. This is a person who specializes in that area of the law and can provide the most help.
Photo 1: Scott Graham
Photo 2: Melinda Gimpel
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