Fundamental Estate Planning
The primary benefit of a successful estate plan is peace of mind that you, your spouse, and your children will be provided for in a manner consistent with your intentions. Additionally, maximizing the value of your estate for the benefit to your heirs by reducing legal expenses, exposure to liabilities, and taxes are all important considerations. Estate planning also concerns ensuring that your needs are fully protected while living.
Family dynamics like children from prior marriages, a spouse and/or child(ren) with special health needs, and a desire to ensure that your intent is followed when others may disagree are all considered when preparing a proper estate plan.
Estate Plan Components
An estate planning attorney must be a good listener to fully understand the needs and wishes of the client, while also paying close attention to family issues and dynamics. Components of an estate plan may include:
- A Last Will and Testament;
- A Revocable Living Trust;
- Pour-Over Will
- A Durable Power of Attorney;
- An Advance Health Care Directive; and
- A HIPPA Authorization.
Last Will and Testament
A will is a legal document whose purpose is to specify the person you choose to inherit your property, and who you appoint to distribute your property and pay your bills. A will can also be used to designate a guardian for any minor children in the event of an unforeseen tragedy. A will is relatively simple to prepare, and can be modified or revoked at any time. One disadvantage is that by itself, a will does not avoid probate.
Revocable Living Trust
A properly crafted revocable living trust will ensure that your assets are there for you during your entire life while preserving what is left for the benefit of your heirs. Like a will, a revocable living trust can be amended or revoked at any time. One major distinction from a will is the avoidance of probate, which may save your heirs thousands of dollars in court costs and your attorney’s probate fees. In addition to avoiding the time and expense of probate, a revocable living trust allows for much more flexibility than a will, as trust assets can be distributed according to the wishes of the grantor, rather than in a lump-sum.
In conjunction with a revocable living trust, the use of a pour-over will is an important part of your estate plan. In the event that a trust asset is omitted from the trust, a pour-over will ensures that the asset will be distributed to the person(s) intended under the terms of your trust.
Durable Power of Attorney
Consistent with the objective of protecting your interests while living, your estate plan must provide for your financial affairs in the event that you suffer an injury or illness. A Durable Power of Attorney nominates a person or persons to act on your behalf if you become incapacitated, certifying that your bills will be paid while you recuperate. Without a Durable Power of Attorney, an interested person will have to petition the Court to be appointed as the Conservator of your Estate–a very time-consuming and expensive court proceeding.
There are two types of Durable Powers of Attorney: an Immediate Durable Power of Attorney and a Springing Power of Attorney. An Immediate Durable Power of Attorney takes effect immediately when signed. While you do not lose any rights or powers over your finances when executing an Immediate Durable Power of Attorney, you are giving the person(s) nominated co-equal powers to access your property, even though you may not need it at the present time.
A Springing Power of Attorney does not take effect when signed. It only takes effect in the event that you later become incapacitated. To become effective, letters from two physicians must be attached to the document which indicate that you are currently incapacitated.
Whether you should use an Immediate Durable Power of Attorney or a Springing Power of Attorney depends on what you believe is best for your circumstances. Generally speaking, younger adults tend to prefer Springing Powers of Attorney while older adults tend to opt for the Immediate Durable Power of Attorney. Factors such as lower risk of abuse and convenience tend to mitigate in favor of granting immediate access.
Advance Health Care Directive
An Advance Health Care Directive nominates one or more persons to act for you on your behalf if you are not able to communicate with your physician and are in need of medical attention. In addition to nominating one or more persons, you are also able to address other “end of life” decisions.
In the absence of an Advance Health Care Directive, a Conservatorship of the Person may be necessary to appoint some interested person into making health care decisions for you; they decide where you will live and what kind or degree of care you shall receive. A Conservatorship of the Person is an expensive and time-consuming court proceeding that may be avoided with a properly executed Advance Health Care Directive and Durable Power of Attorney.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a Federal law designed to provide privacy concerning medical records. An unintended consequence is that health care providers may not share essential medical information to persons you have nominated because such disclosures may violate your right of privacy. A HIPPA Authorization is a document which allows the person you have nominated to make medical decisions on your behalf, to have access to your medical records if necessary, to give consent for medical procedures, and to make informed medical decisions.
Getting Help with Estate Planning Lawyers
Contact NewPoint Law Group today to discuss your particular estate planning concerns. We look forward to designing an estate plan that meets your present and future needs. To schedule a free consultation, call 1-800-358-0305 or contact us online.