Legal Help
What happens if you don't have a will? Do you want someone who you don't know dictating who gets what and how after you pass away? Do you mind if the state assigns you a doctor? What will Medicare or Medicaid get? Will I lose 55% of my estate to federal taxes? These are all questions that basic estate planning can help answer and eliminate. Let's get started on covering some basic questions that can help you plan an estate.
Estate planning involves the determination of who will inherit your property upon your death. Estate planning should also include actions intended to minimize taxes, avoid probate when possible and address issues related to the care and custody of minor children and any family members with special needs. Special needs trusts are often much more complex and costly and should be handled by an attorney specializing in the special needs field.
It is important to remember that if you do not set forth detailed instructions about your estate, the state will do so for you.
The degree of estate planning needed will depend on a number of factors. In general, every person should have a will and should consider having a durable power of attorney and a medical power of attorney. If you have minor children, you will want to consider a trust in order to provide for the management of your property during the time they are minors and perhaps for a longer period. If your assets exceed $1,500,000, you may need to consider a trust designed to minimize estate taxes upon your death. However, the most important aspect of any estate plan involves your plan accomplishing your goals and wishes. It is important to remember that if you do not set forth detailed instructions about your estate, the state will do so for you. The state sets forth who will inherit your property upon your death if you fail to dispose of your property in a will. How the state has determined the way your property will pass may be different than how you may want to pass your property. State law may dictate the executor of your estate, your doctors and other medical providers if you cannot make the decisions and many other decisions if you have not defined clear procedures for yourself and your estate. Again, the decisions made by the state may or may not be the decisions you would have made for yourself. The only way to be sure that your goals and wishes are followed is to document them in a legally binding manner. This usually means signing a document that states very specific goals and that has been signed, witnessed, and notarized as required by law.
Specific documents are intended to achieve specific goals. Some of the more prominent documents are as follows:
Will
A will sets forth how and to whom your property will pass upon your death. It is important to remember, however, that a will only transfers property which you own in your name alone (or a divisible interest). Property owned as a joint tenant with right of survivorship or for which a beneficiary has been designated will not be transferred by a will. A will generally names a personal representative of your estate commonly known as an executor or executrix. That person or group will then divide the estate according to the directions you left through the will. A will is only effective upon death and can be changed as your goals and wishes change.
Living Will
A living will sets forth your wishes regarding medical intervention if you are in a coma, a persistent vegetative state or terminally ill with no reasonable expectancy to live without the use of life support. Many people think of a living will as a declaration that, if they are terminally ill or in a persistent vegetative state, they wish to die naturally without undue medical intervention designed to prolong their life.
Medical Power of Attorney
In a medical power of attorney, you authorize a person or persons to make health care decisions for you if you are unable to do so. A medical power of attorney can include specific directions for your health care representative to follow, including but not limited to, a living will type provision. A medical power of attorney does not supersede your ability to make your own health care decisions. Rather, the person named as your health care representative has the authority to act only if you are unable to do so as determined by your physicians.
Durable Power of Attorney
In a durable power of attorney, you authorize a person to take care of your financial transactions. A durable power of attorney can be conditioned upon your inability to take care of your financial transactions yourself but more often is not so limited.
Trust
A trust is a document created during your lifetime by a separate agreement (an inter vivos or living trust) or under your will (a testamentary trust). In a trust, you transfer property to a person or bank as trustee to be used for the benefit of another (the beneficiary). A trust can be used for a number of purposes, including to minimize taxes or to provide for the orderly management of your assets when the beneficiary may be incapable (because of age, illness or other reasons) of managing the assets themselves. People are often reluctant to engage in estate planning because they are uncomfortable talking about death and illness. When you plan your estate, however, you provide your loved ones with directions to follow with your incapacity or death. This in turn will minimize the emotional turmoil they will experience when the time comes. Moreover, it will make sure decisions are made with reason and not emotions.
It is important to realize that estate planning is not an event but an ongoing process that will evolve and change as the individual changes. Changes in your financial status, a marriage, a death or divorce are all events that will need to be addressed in your estate plan. You should review your plan and all your documents at least every couple of years to verify all pertinent information. By planning your estate and communicating your decisions with your loved ones, you will be lessening the conflicts and difficulties that they may encounter later.