What Is Estate Planning?
You can save your loved ones a lot of money and frustration by devising a plan for the management of your health care and property in the event you become severely disabled or pass away. An estate planning lawyer can help you with:
- Advance health care directives that give instructions on how you want your health care managed if you become incapacitated and unable to speak for yourself
- Powers of attorney that appoint someone to manage your property and sign legal papers for you if you become severely incapacitated
- Wills and probate that transfer your property to selected beneficiaries upon your death
- Trusts that provide for the care of minors or disabled persons, minimize taxes, or protect against creditors
- Strategies to avoid probate that transfer property at death
- Medicaid eligibility planning
Advance Health Care Directives
Advance health care directives are written instructions that tell how you want your health care to be managed if you become so ill you can’t speak for yourself. You can include one or more of the following parts:
- Living Will: You can use a Living Will to indicate whether you want life prolonging procedures, like artificial respirators or feeding tubes, to be withheld if you develop a terminal condition or become permanently unconscious.
- Health Care Surrogate Designation: You can authorize someone to make health care decisions if you are unable to make these decisions.
- Anatomical Donation: You may give instructions about the donation of all or part of your body upon death.
Powers of Attorney
In many states, you can sign a durable power of attorney to appoint someone to handle your assets if you become incapacitated. At a minimum, a power of attorney should include the power to:
- Manage and transfer all assets
- Deal with the IRS
- Make gifts on your behalf
- Create and amend any trusts you set up
Making A Will
In many states, you can make a valid will if you are at least 18 years old and of sound mind. The will must be in writing and be signed by you at the end of the document, or someone else can sign your name in your presence as directed by you. Two witnesses must also sign their names to the will in your presence.
In the will you can:
- Distribute your property
- Select a guardian for your minor children
- Name an executor to manage the probate of your will and the distribution of your property after your death
You can change your will by making a new will that replaces or revokes the old one or by making an addition to the will, called a codicil. Changes such as a marriage, divorce, birth or adoption of a child, new property ownership, or moving to another state should cause you to review your will and consider whether it should be changed to fit your new situation.
An estate planning lawyer can explain the consequences of some of the most basic choices you must make, such as whether property you want to leave to your minor children should be put into a trust at your death. It makes sense to consult with an estate planning lawyer and have him or her draft your will so you avoid costly mistakes and achieve your intended results.
Dying Without A Will
If you die without a will (known as dying intestate) in many states, your assets will be divided among members of your immediate family. If you have a spouse but no children, your entire estate will go to your spouse. If you have a spouse and at least one child or grandchild who is also your spouse's descendant, the first $60,000 of your estate beyond homestead entitlements, plus one-half of the remaining estate, will go to your spouse. If you have children or grandchildren that aren't also those of your spouse, your spouse gets one half of your estate. The remainder goes to your children, grandchildren, or great-grandchildren.
If you have no spouse or children, your estate will go to your parents if they are still living. If your parents aren't still alive, your estate will go to your siblings.
Alternatives To A Will
Wills may become public after your death. It can also take time for property to be distributed through the probate of a will. That's why many people look for more private ways to transfer their assets.
In many states, alternatives to making a will include:
- Life insurance policies or trusts
- Gifting cash or other assets before death
- Transfer On Death or Payable On Death bank accounts
- Holding property by joint tenancy with right of survivorship, with the assets transferring automatically to the other joint tenant at the time of death
- Retirement plans and Individual Retirement Accounts
- Revocable living trusts (sometimes called grantor trusts), giving your assets to a trustee for management before your death
There are many kinds of trusts, but most commonly trusts are set up to care for minor children or disabled adult relatives. A parent can name a trustee to be in control of the trust finances and decide whether to sell or keep property, and manage assets such as real estate. The trustee, usually a family member or trusted friend, can be paid an hourly rate or a set monthly amount for their services out of the trust assets.
Probate is the public process of:
- Filing and validating a will in court
- Paying all the debts and taxes of the deceased person
- Dividing up the assets according to the will or state law
After a person dies, their will is filed with the clerk for the circuit court in the county where the decedent last lived. It is a good idea to contact a probate attorney, preferably the one who drafted the will, to assist with the probate process. The laws are complex, and professional legal advice is especially important if the decedent left a lot of property.