WILLS, TRUSTS & ESTATE PLANNING:
We would be happy to assist in preparing an estate plan which best suits your individual needs. Please feel free to call with any questions and/or to set up an appointment to discuss your options.
Some basic Estate Planning documents include the following:
Some typical Estate Plans include the following:
Estate Plans for taxable estates should include some of the following:
Many, if not most, people do not have a will, and many of those who do are not exactly sure what it says or if it will do what they want it to do when needed. There are a lot of reasons for this, including:
It is easy to put off making a will, but the sad fact is that dying without a good estate plan often causes enormous financial and emotional hardship to surviving friends and family members. As a probate attorney, I have seen families literally torn apart as the result of an ineffective estate plan. This article is intended to help you deal with the obstacles to good estate planning, and to provide the information you will need to create a good estate plan and avoid paying too much for it.
WHAT IS ESTATE PLANNING?
For purposes of this article, we’ll define estate planning as the process of planning for the disposition of your assets at or prior to your death. From a financial planner’s perspective, estate planning also includes planning to create wealth through things like investments and insurance. In this article, we are not concerned with how you accumulate whatever assets you have, but instead, with how you plan for their disposition.
ESTATE PLANNING TOOLS.
Estate planning can become very complex and involve sophisticated tools such as charitable remainder trusts, family limited partnerships, and other complicated arrangements. However, in the vast majority of cases, an effective estate plan consists of the following documents:
Wills. A will is a legal document containing instructions for the disposition of your property following your death and the administration of your estate (i.e., payment of bills, taxes, etc). Generally, to be valid, a will must be signed by you in the presence of two witnesses who will also sign the will. The witnesses are required so that they can confirm the signature is in fact yours, that you understood what you were doing when you signed, and that no one was causing you to sign against your wishes. A will does not have to be notarized, however, having it notarized can make it easier to confirm the will as valid following your death.
General Durable Powers of Attorney. A general (financial) durable power of attorney is a document which gives someone else authority to act on your behalf in the event you become incapacitated and are unable to do so. For example, if you are injured in an accident and in a comma for an extended period, a financial power of attorney authorizes someone to deposit any income you receive into your checking account, pay your bills, etc.
Medical Durable Powers of Attorney. A medical durable power of attorney is a document which gives the individual you name the authority to make medical decisions on your behalf in the event you are incapacitated. This might include hiring and firing doctors, moving you to a new medical facility, decisions as to medical treatment, and other similar activities.
The provisions of both the general durable power of attorney and medical durable power of attorney could be included in a single document, however, it is customary to use separate documents. Among other things separate documents avoid the time and expense of having hospital counsel review irrelevant pages of financial provisions or having bank counsel review pages of medical provisions.
Why Are Powers of Attorney So Long? Many clients complain that powers of attorney are too long and complicated. The complaint is valid, but there is a good reason for the length and complexity. In essence, a power of attorney could simply say "My agent is authorized to do everything I could do if I were not incapacitated." Theoretically, this could be sufficient. However, experience shows that, as a practical matter, such simple powers of attorney don’t work. For example, if you signed such a power of attorney, and the person you named as your agent in that power of attorney presented it to your bank requesting to sign checks from your account to pay bills on your behalf. The bank would very likely refuse, saying that the power of attorney did not specifically authorize the signing of checks on your behalf. Consequently, good powers of attorney will have a provision specifically authorizing the agent to sign checks on behalf of the incapacitated person. Other provisions are included to address as many other specific powers as possible, so that the agent will not have to go to court to enforce his or her authority under the power of attorney.
Living Wills. A living will is a document which provides instructions to friends, family, and medical care providers in the event you are in a terminal condition and being kept alive by means of artificial life support. In short, the living will tells everyone when they should "pull the plug." As with the will, a valid living will requires two witnesses.
Trusts. Trusts can be complex, but in essence, a trust is simply an arrangement whereby you give your property to one person to be used for the benefit of another person or persons. The property is generally referred to as the" trust principal." The person to whom you give the property is referred to as the "trustee," and the people for the benefit of whom the trustee is to use the property are referred to as the "beneficiaries."
Trusts are extremely flexible. For example, you can transfer property to a trust for the benefit of your children, and act as trustee of that trust. Of course, as trustee, you will be required to comply with the provisions of the trust and will not be able to treat the property in the trust as your own.
A trust does not have to be in writing, though it certainly should be. In fact, if you give $10 to your neighbor to buy ice-cream for your kids, you have in effect created a trust. The money is the trust principal, your neighbor is the trustee, and your children are the beneficiaries. Of course, most trusts are a lot more complicated than that. In fact, many written trusts consist of 20, 30, or more pages. The complexity is the result of detailed instructions which may be intended to provide guidance over long periods of time and for numerous contingencies.
Trust provisions may be included in your will to create a trust following your death or you may execute a separate trust document to create a trust during life. We will discuss some ways trusts are used below.