Estate planning may not be the most pleasant topic for some people, but it is crucial for everyone to give this concept the attention it deserves. Spending time and effort building an estate plan as soon as possible can provide financial security and peace of mind to you and your family. In addition, legal counsel you can trust is an invaluable asset if you need to craft a new estate plan or adjust an existing plan after a divorce or other major life event. An experienced estate planning attorney can assess your needs and help you craft the most fitting estate plan possible.
While everyone has unique family dynamics and different financial considerations for their estate, there are a few foundational components that every estate plan should include. If you are unsure how to approach estate planning or what your estate plan should entail, there are four basic elements that every estate plan should include. Understanding these elements and addressing them with the help of an experienced estate planning attorney is the best way to develop a robust and reliable estate plan that can fulfill its intended purpose.
One: Last Will and Testament
Most people are familiar with the concept of a last will. This document allows you to leave a parting message for your loved ones after your death. It is also a means of making your wishes known regarding the inheritance of your property. For example, if you want specific family members to inherit specific things from you, you must stipulate these beneficiary designations in your last will and testament. This document can also include your preferences regarding guardianship for your children.
It’s possible to develop a last will and testament on your own, but it is always best to have an attorney assist you with its development. While you may be able to articulate your wishes verbally, translating them into legally enforceable written verbiage can be challenging. Additionally, there are procedural considerations for creating a last will and testament you could overlook on your own. For example, if you include beneficiary designations that conflict with those listed on individual accounts, such as a retirement account or life insurance beneficiary designation, this can lead to contentious disputes among your family members in estate administration.
Two: Trust or Living Trust
Estate administration is the formal legal process of distributing the contents of a deceased individual’s estate to their beneficiaries. After all of the deceased’s outstanding debts are paid from their estate, the remaining funds and assets are distributed according to the state’s law for intestate succession. This can lead to lengthy and stressful probate proceedings, disputes among family members, and heavy taxation on estate distributions. A trust or living trust can potentially help your loved ones avoid probate proceedings by placing the contents of your estate into the ownership of a trusted personal representative.
There are several options for creating a trust. For example, it’s possible to help your loved ones avoid estate taxes by creating an irrevocable trust, but you will not be able to modify it after its creation. Conversely, you could create a flexible living trust that allows you to make changes as necessary up until your death. However, the contents of this type of trust would still be subject to various forms of estate taxes. An experienced attorney will help you determine what type of trust would be best for your needs.
Three: Durable Power of Attorney
It’s possible that you could become incapacitated from a serious injury, a critical illness, or the effects of old age. If you cannot convey your wishes or make legally binding decisions on your own behalf, a durable power of attorney assigns a trusted representative to make them for you. Designating someone such as your spouse or an adult child as having your power of attorney empowers them with your signature. They will make legal decisions on your behalf if you become incapacitated or unresponsive. Many people who create robust estate plans choose a personal representative who assumes the responsibilities of a trustee, power of attorney, and executor of the estate.
Four: Advanced Medical Care Directive
An advanced medical care directive allows you to make your preferences known to your family when it comes to medical care, life support, and palliative care in various medical situations. For example, if you become unresponsive and there are risks associated with a potentially lifesaving procedure, your advanced medical care directive can indicate to your family whether you agree to such risks. In addition, this document is ideal for individuals with very specific spiritual beliefs, medical conditions, or other unique needs regarding medical treatment and end-of-life medical care.
Why Should I Create an Estate Plan?
Ultimately, any good estate plan should include these four basic elements, and it’s possible for anyone to create an incredibly detailed and legally enforceable estate plan that limits uncertainty for their family. When a person dies without any estate plan in place, their property becomes “intestate,” and state law determines where their property goes. The intestate succession laws dictate who is first to inherit the deceased’s property, typically their surviving spouse, followed by children, other immediate family members, and extended relatives. These distributions unfold through the probate process, which is notoriously stressful, tedious, and expensive for all parties involved.
You can help your family avoid the stress and expense of probate by crafting a comprehensive estate plan. While disputes can always arise, no matter what type of estate plan is in place, a good attorney will help you develop an estate plan that covers as much as possible. This will significantly streamline legal proceedings after your death, save your family time, money, and stress, and ensure your final wishes are respected and fulfilled as closely as possible.
It’s natural to feel uncomfortable thinking about end-of-life legal considerations, but taking time to evaluate these issues can be incredibly beneficial for your family in the long term. A good attorney will help you create an estate plan that clearly outlines the distribution of your assets and helps your family complete estate administration as efficiently as possible. If you’re unsure what your estate plan should include, contact an experienced estate planning attorney and find out how they can assist you.