Many people believe that estate planning is only for people who are particularly wealthy, have elaborate schemes in mind for passing their money to their heirs, or for people who are acutely ill and contemplating their death. This could not be further from the truth!
Estate planning is for every husband, wife, mother, father, grandparent, business owner, professional, or anyone else who has someone they care about, are concerned about providing responsibly for their own well-being and for the well- being of those they love, and for anyone who seeks to make a difference in the lives of others after they’re gone. Estate planning is not ‘death planning'; it’s ‘life planning’, and an essential and rewarding process for individuals and families who engage in it.
When done properly, estate planning requires that a highly trained individual lead you through one or more in-depth meetings to uncover your hopes, fears, and expectations for yourself and for those who are most important to you. This process almost always requires the preparation of several sophisticated legal documents, but those documents themselves are not ‘estate planning.’ Planning is a process, represented by a complete strategy that is properly documented and maintained by a professional who has taken the time to get to know you, and who is committed to continuing to serve you.
Providing for Incapacity
No one ever plans to become disabled. Although everyone realizes that life will end someday, few of us consider the possibility that we will spend a significant portion of our lives unable to fully care for ourselves. Very often, life gets in the way and bad things happen to ordinary people. Disability doesn’t just happen to the elderly or those who pursue risky and dangerous hobbies. Motor vehicle accidents, work-related injuries, and otherwise common illnesses render many individuals disabled or ‘incapacitated’ every year.
Incapacity planning must be a part of every comprehensive estate plan. Proper planning will allow you to legally designate individuals who can make decisions for your care and empower them to manage your property if you are unable to do so for yourself. As a part of estate planning, there will be sophisticated legal documents involved, but dedicated and experienced legal counsel will help you understand your options and prepare a plan that is tailored to your needs.
When a person becomes disabled, he or she is often unable to make personal and/or financial decisions. If you cannot make these decisions, someone must have the legal authority to do so for you. Otherwise, your family must apply to the court for appointment of a consentor or guardian for either your person or your property, or both. At a minimum, you need broad powers of attorney that will allow agents to handle all of your property if you become disabled, as well as the appointment of a decision-maker for health care decisions. Alternatively, a fully funded revocable trust can ensure that you and your property will be cared for as you desire, pursuant to the highest duty under the law of a trustee.
If you leave your estate to your loved ones using a will, everything you own will pass through probate. The process is expensive, time-consuming and open to the public. The probate court is in control of the process until the estate has been settled and distributed.
If you are married and have children, you want to make certain that your surviving family has immediate access to cash to pay for living expenses while your estate is being settled. It is not unusual for the probate courts to freeze assets for weeks or even months while trying to determine the proper disposition of the estate. Your surviving spouse may be forced to apply to the probate court for needed cash to pay current living expenses. You can imagine how stressful this process can be. With proper planning, your assets can pass on to your loved ones without undergoing probate, in a manner that is quick, inexpensive and private.
Planning for Death Taxes
Whether there will be any federal estate tax to pay depends on the size of your estate and how your estate plan works. Many states have their own separate estate and inheritance taxes of which you need to be aware. There are many well-established strategies that can be implemented to reduce or eliminate death taxes, but you must start the planning process early in order to implement many of these plans.