Estate planning is a topic that everyone (understandably) puts on the back burner. But whether you realize it or not, you have an estate and it is important to outline your wishes and desires to better guide and protect your loved ones. Let’s go over the basics.
1. What is an Estate Plan?
A quality estate plan is more than just a will or a trust that provides instructions stating who will receive your assets when you pass away. Your plan should also include Powers of Attorney that name people to assist you in making healthcare and financial decisions, if you are incapable of making those decisions for yourself. A living will is also essential to ensure your loved ones follow your wishes should you fall into a permanent vegetative state. Most importantly, if you have minor children, you will want to designate guardians for your children upon your passing, which will convey your wishes to the court, family members and other interested persons. Bottom line — your estate plan is meant to keep you in control even in times when you are unable to vocalize your wishes.
2. What is a Revocable Trust (“Living Trust”)?
A Living Trust is a document created by you as the “Grantor” that provides instructions for the administration of your estate during your lifetime, incapacity and after your death. A Living Trust is flexible, as it allows you retain all of the authority to modify and control the Living Trust and the assets, so long as you have legal capacity.
3. What are the Main Differences Between a Will and a Living Trust?
The first distinction between a Living Trust and a Will is that a Living Trust keeps your estate matters private. When a person passes away and a Will governs their assets, the Will must be filed with and administered under the supervision of the court, which is known as “probate.” Since probate proceedings are open to the public, anyone is capable of receiving a copy of your Will, learning what assets you owned at the time of your death, who your creditors are and when your beneficiaries will receive their inheritances. As previously mentioned, the second main difference between a Will and a Living Trust is that in most states a Living Trust is not subjected to the probate process. Along with keeping the administration of your estate private, benefits of avoiding the probate process include: reduced attorney and administrative fees, less formalities and a shorter amount of time to administer the estate. Third, planning for your possible incapacity is an option when creating a Living Trust but not when creating a Will. Since a Will goes into effect after you pass away, it has no authority to give instructions to your loved ones during your life. Conversely, a Living Trust will direct your successor trustee as to how your assets should provide for you and your family, in the unfortunate event that you become incapacitated. Lastly, it is important to note that a Living Trust is not always necessary and is substantially more expensive than a Will. Depending on your goals, it is possible to accomplish your wishes through the use of a Will supplemented by the documents discussed below.
4. What is a Financial Power of Attorney?
A Financial Power of Attorney is a simple document stating who will manage your finances at a designated time. It is important to ensure that your Financial Power of Attorney is “durable” and continues to authorize your designated agent to act should you become incapacitated. You have the option to make your Financial Power of Attorney effective immediately, or wait until you become incapacitated (“springing”).
5. What are Advanced Medical Directives?
These documents are your Durable Healthcare Power of Attorney and Living Will. Your Healthcare Power of Attorney will nominate the person(s) who will make your medical decisions in the event that you are unable to voice your desires. Your Living Will outlines your preferences for medical treatments and procedures should you become temporarily or permanently incapacitated.
6. Is there Really a Difference Between Creating my Estate Plan Online vs. with an Attorney?
YES! It is not uncommon for a child to walk into our office with a Will that their parent created online. We have yet to find an easy way to say: “I’m sorry, this document does not meet the state requirements and is invalid.” Additionally, if you do a little digging, you’ll notice that all of those sites have disclaimers stating that they are not attorneys and barred from providing legal advice. Therefore, people using those sites are lured into a false sense of security by answering the prompted questions, thinking that they are being “guided” through the estate planning process. In actuality, since these sites are barred from providing legal advice, the unsuspecting subscribers do not realize that they are in fact relying on their own legal knowledge & expertise. The result of filling in those blanks is the creation of a generic document purporting to protect your loved ones.
7. How Difficult is the Estate Planning Process?
Hopefully our clients are not lying to us when they say that their experiences were enjoyable. Meeting with an estate planning professional should consist of comfortable conversations centered around your goals and desires. These conversations will include discussions about you, your loved ones, family values and the legacy you wish to leave behind. From a few simple conversations, your estate planning professional should be able to do all of the heavy lifting and construct an estate plan that is specifically tailored to protect and serve your loved ones.
8. When should I begin the Estate Planning Process?
It depends. Everyone has an estate plan whether it was: 1. created by an estate planning professional, who narrowly tailored these documents to fit their client’s goals, objectives and family dynamics; or 2. created by their state legislature as a blanket plan to cover those who passed without specifying their wishes. Whether your estate is controlled by the first plan or the second, be sure to begin the estate planning process when you feel that modifications are needed to adequately provide for you and your loved ones.
The above is general information ONLY and is not legal advice, does not form an attorney-client relationship, and should NOT be relied upon to take or refrain from taking any action. We are not your attorneys unless you have retained Corthell and King, P.C. In the event you have inquires, you should seek the advice of competent counsel before taking any action.