Estate Planning, Wills, Trusts and Powers of Attorney
Most people will work 80,000 hours (2,000 per year for 40 years) to accumulate an estate but spend little, if any time, planning how to dispose of it at death or to plan how their assets will be managed should they become disabled.
Estate planning is a process and should be done with the benefit of the counsel of advisors familiar with your goals and concerns, your assets, how they are titled and your family structure and objectives. The process is the consideration of the effective, efficient and wise transfer of property at death, planning of its management during a period of disability or incapacity and equally, if not more important, health-care & placement decision-making for the care of your person in times of incapacity.
Knowing What Tools To Use
Though general patterns apply, each person’s situation and desires are always unique. Differing family make-ups and dynamics, types of property and assets owned, and particular goals & objectives make each client’s circumstances distinct. One document does not fit all. Good estate planning is a confluence of understanding the client’s special circumstances and of matching the right legal instruments with those specifics to devise the most effective and efficient estate plan.
- Property Management and Disposition
- A. At Death
- Property Management and Disposition
The law affords a number of different tools to aid a person in making the best disposition of property at death. Common instruments include, among others:
A will and accompanying memorandum for disposition of personal property;
Revocable (“living”) and/or irrevocable trusts,
Joint tenancy designation(s),
“Payable-on-death” designation(s), and
Beneficiary deed(s) for disposing of real estate.
Before deciding on which one or more documents will best fits those circumstances, the client and attorney should discuss and resolve the following issues:
√ Do I need a will? Is a revocable living trust more appropriate to my situation?
√ When might a joint tenancy arrangement be a good substitute for a will or revocable trust? What are the legal and tax disadvantages of a joint tenancy arrangement?
√ If I do not have a will or revocable trust, are the persons who I want to receive assets qualified to hold and manage them. Should I create a trust giving my family more protection and security?
√ What are the costs of administering an estate without a will or revocable trust compared to one without such a document?
√ Under what legal and tax circumstances is it better not to leave all of my assets to my spouse?
√ What are the costs and what are the possible savings to utilizing a trust for both the management of my assets during my life and the disposition of my assets at death?
√ Should I prepare a trust in my will to give my children greater assurance for their support and education, and at what ages should payments begin?
√ Why is the use of a will important to parents and their minor children for the designation of a guardian for their care. What happens to minor children if parents die without a will?
√ What does the law provide as to who will administrator my estate if I die without a will or revocable trust?
√ Should I make lifetime gifts of monies or other assets to reduce income or estate taxes?
√ How can a trust be used to provide my family with asset protection?
√ Can I get my assets back if I set up a trust during my lifetime?
√ What qualifications do I look to in choosing a trustee?
√ How should my estate planning be utilized to assure that there will be enough cash available after my death to pay taxes and the cost of administering my estate?
√ How can I provide for children from my first marriage and be fair to my current spouse or children?
B. During My Lifetime: Incapacity
Equally important to the planning of how to dispose of assets at death is “incapacity planning”: How are my assets to be managed during my lifetime should I become disabled or incapacitated.
The components of this type of property planning are the creation of documents at least the following:
A property/financial durable power of attorney;
A Property/Financial Power of Attorney allows you to designate another person (called and “agent”) to make property and financial transactions on your behalf in the event you become incapacitated.
Care Of My Person During My Lifetime: Incapacity
How am I to be cared for should I become incapacitated during my lifetime? The components of this planning should include at least the following
A Health Care (medical) durable power of attorney;
For parents of minor children, the designation of a guardian for a minor or incapacitated child should the parent be unable to do so.
A “living will” that provides your instruction on end-of-life decisions regarding the use or suspension of life sustaining medical or surgical treatment.
A Health Care Power of Attorney allows you to designate an agent to make health care decisions on your behalf (or on behalf of a minor child) in the event of your incapacity.
A parental appointment of guardian states the parent’s designation to become effective when the instrument is filed in the appropriate court and the named guardian files an affidavit accepting the designation.
Care Of My Body At Death
Declaration As To Disposition of Remains.
A Declaration As to Disposition of Remains is a detailed statement designating that person who is authorized to, among other things, dictate whether your body is to be cremated or buried, where the remains are to be interred, what arrangements (if any) are in place for the payment of the expenses and any other instructions as to anatomical gifts, arrangements for your services, and other like issues.
Without these types of documents statutory default provisions would come into play that may or may not be consistent with your desires. Some circumstances include the court appointment of a guardian and/or conservator, a process is both expensive and time-consuming. It should be kept in mind as well that as the longevity of persons increases the greater is the chance that each of us will experience a period of disability. You have to plan ahead for incapacity because the opportunity is lost once you become incapacitated. [See discussion of these in the “Conservatorship, Guardianship and Other Protective Proceedings” link on this Website].
Some final thoughts. Powers of Attorney require deliberation and careful planning. Issues that need to be discussed and implemented include but are not limited to the following:
The extent of the agent’s powers. The power of attorney document sets out the agent’s powers. They can be as extensive or as limited as you (the “principal”) determine.
At what point in time the powers becomes effective. Based on the client’s wishes the powers granted by the instrument can take effect immediately or they can become effective only once the client is disabled. The latter is called a “springing” power of attorney. While a springing power of attorney provides added protection, it can cause delays and extra expense in determining and documenting the fact that the principal is now incapacitated. If the power of attorney is springing, the process for determining the incapacity will need to be laid out carefully in the document.
Whether there will be one or more agents. More than one person can serve as an agent. If there is more than one agent serving concurrently, it is important to determine whether there needs to be a consensus or whether each can act independently. Alternatively, one agent may be appointed with another to act as a successor agent if the primary one is unable or becomes unwilling to serve.
Utilizing the document to nominate a conservator and guardian. Although one of the primary objectives of a power of attorney is to avoid the court process of appointing a conservator or guardian, the document can state your preference as to who you would like that person to be, should unforeseen or unusual circumstances develop that make such appointment necessary.
Please call if I can be of counsel to you with your estate and disability planning and document preparation to give you and your family not only the peace of mind but the actual structure and framework to minimize or eliminate the otherwise costly alternatives of no plan or an inadequate one.
The above is not legal advice. That can only come from a qualified attorney who is familiar with all the facts and circumstances of a particular, specific case and the relevant law.