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Estate Planning Basics

Updated on May 11, 2012

Estate Planning Basics

I have always found it astonishing just how many of the clients I have come across over the years that have not seriously addressed the issue of estate planning. Many feel that their net worth simply does not justify paying a great deal of attention to such a topic. However, in most cases estate planning is not nearly as complex as most may assume. Rather it just requires some fairly simple documents that virtually all of us should establish.

The first thing you should know is that if you do not have an estate plan in place, have no fear…The state you reside in already has one for you. But it is likely a far cry from meeting your wishes. When someone dies without the simplest of documents, a last will and testament you are deemed to be intestate. This means that your states laws of intestacy will prevail.

The most basic of documents is the Will. A will, does not avoid the probate process. Probate is the process by which the surrogate court resolves any outstanding debts on the decedent’s estate as well as addresses the distribution of assets including personal property. If there is a will in place the court will address whether or not it is genuine and typically carry out the wishes of the deceased party. However without such a simple document, your personal assets will be distributed according to law and not your personal wishes. Considering the vast and diverse personal family dynamics that many of may have, it is usually not prudent to leave this decision to the court. Perhaps you have already loaned one of your children substantial assets to start a business while the other child has been advanced nothing. In such an instance you may not wish to have your assets distributed equitably at death. There are numerous circumstances in which you may have specific bequests that you wish to be carried out. It is important to make it a matter of legal record.

In some cases a living trust or family trust may be used to replace the will. This typically is accompanied by a pour over will. The living trust is a document that allows you to address the distribution of assets and bypass the probate process. The advantages are that you can often provide greater specificity in your instructions. Furthermore, at the time of a passing of a loved one, many would not wish to have to deal with the probate process. The living trust is a document sometimes over sold by attorneys as avoiding the cost of probate. However probate is not an expensive process, it is simply time consuming depending on the size and complexity of an estate. A living trust is essentially pre-paying probate and simplifying the process for your heirs. There are some other benefits that may fit your circumstance and make a personal trust suitable.

Other issues addressed in the estate process through such legal documents are issues such a guardianship of your children or perhaps a disabled party. What if you should pass away prematurely with minor children and no written instructions on file ??? Who would care for your children ??? You can be assured that your employed alcoholic brother whom has never been in trouble with the law would more likely be the legal guardian of your child over that of your nurturing, yet unemployed sister whom was downsized from her job last year.

Additionally, there are other basic documents that should be in place. Among them would be a living will or a health care proxy and possibly a durable power of attorney. A healthcare proxy or living will is more comprehensive than a do not resuscitate (DNR). It can allow for specific instructions and insight into your wishes. We can all remember the terrible case of Terri Schiavo several years ago. Simply putting these instructions to paper can not only carry out your wishes, but avoid quite a bit of painful decision making for your family members.

The durable power of attorney allows for your affairs to be addressed while you are alive. It can be springing (taking effect at the point of incapacity) or non-springing (effective immediately). This is a fairly vital document, as it can be nearly impossible for family members to carry out simple tasks such as writing a check from your account to pay your electric bill while you are in a coma or somehow incapacitated, yet not deceased.

These are some fairly basic issues that we should all address by acquiring at least the most basic of documents. It should be noted that the issue of estate planning can be far more complex when dealing with sizeable estates. Issues of asset titling, taxation, long term health care, small business planning and various other topics may need to be addressed. It is important to work with an attorney whom specializes in the field of estate planning. Furthermore, your financial planner and tax advisor should also be part of the process.


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