Estate Planning – the basics and beyond

Estate Planning Basics

Many people think that only those that are wealthy or retired need estate planning. The fact is, everyone needs an estate plan. But many are confused about what documents they really need to be part of their plan. A complete estate plan should have at least six documents – a will or trust, a financial power of attorney, a medical power of attorney, a HIPAA release, a directive to physicians (living will), and a declaration of guardian.

A will is a document that says who gets your assets after you pass away. But until you pass away and go through probate, it is just a piece of paper. A will must go through probate to have any effect. A typical living trust (a trust created during your lifetime), is effective during your lifetime and not only will say who gets your assets after you pass away, but it is also helps manage your assets while you are alive if you became disabled.

A financial power of attorney gives someone authority to act on your behalf. Depending on the scope of the power of attorney that person could manage your bank accounts, buy and sell real estate, and other generally deal with other people on your behalf.

A medical power of attorney gives someone the authority to make your medical decisions if you cannot make them yourself.

A HIPAA release allows someone else to legally be able to get your medical information from your healthcare provider.

A directive to physicians, also known as a living will, makes your wishes known if you are on life support and unable to communicate. You can decide now, that if you were in that situation whether you should be kept on life support or have it withdrawn.

A declaration of guardian in the event of later incapacity allows you to decide who will be in charge of making sure your physical needs are taken care of and who would be in charge of your finances.

Advanced Estate Planning – Going Beyond the Basics

While basic estate planning involves creating a plan for what happens if you die, advanced estate planning goes beyond these basics in several ways:

  • Asset Protection Planning – Reviewing your assets and determining which are exempt and nonexempt from creditors’ and nursing home claims in the event of an unexpected disability;
  • Trust Planning– Using trust instruments beyond the basic will to ensure more control of how your assets are used while you are alive and what happens to them after you pass;
  • Planning for Disabled or Problem Beneficiaries – Discussing all of the needs of your beneficiaries and then planning accordingly with certain trust documents that you will always control.

Trust Planning and Asset Protection Planning:

Working with your estate planning attorney, you will establish your foundational estate plan that will allow you and your attorney to assess further needs. As part of creating your base estate plan you will make a list of all of your assets and liabilities and then calculate your net worth. This, in turn, will reveal the estimated value of your estate and which of your assets are exempt or nonexempt from potential creditors’ or long-term care claims. From there, your attorney can develop a plan to reduce or even eliminate the potential forced liquidation of your estate and by restructuring your assets, protect and preserve them for your spouse or heirs.

Planning for Disabled or Problem Beneficiaries:

With advanced planning, your attorney can assess the needs of all of your beneficiaries. If a beneficiary is disabled and receiving government benefits, then the beneficiary will not be able to receive a direct distribution without risking losing benefits.  This may require special planning. A beneficiary bad with managing money or in a shaky marriage also require special planning so that you can be sure they get what you intend in a way that is protected.Screen Shot 2015-05-06 at 9.57.48 AM

There are other reasons you should consider advanced estate planning over that of just creating a simple will, but these reasons are what we have found that clients have the most concerns about.

If you have other questions or would like to discuss the benefits of protecting your family, please call (214) 292-4225.