Estate Planning Process
The Estate planning process is planning for the accumulation, preservation and distribution of an individual’s or family’s property and planning for one’s future care.
Estate planning ensures that one’s wishes are carried out.
Dean Law Office, LLC can assist you in drafting and implementing a well-designed estate plan. Such a plan provides a sense of security and comfort that one’s wishes about one’s caregivers and distribution of assets will be carried out.
The basic estate planning documents an individual should have are: a will or trust, a durable power of attorney, a health care directive and a health care power of attorney. A beneficiary deed or transfer-on-death deed may also be useful in implementing one’s estate plan.
A will is a document that spells out how, when and to whom assets are distributed after your death. In the case of a parent with a minor child, the will can also designate the parent’s wishes as to who should be guardian and conservator of a minor child.
In drafting your will, you need to consider other assets such as life insurance policies, financial accounts and retirement savings (IRAs, pensions, 401(k) plans). These assets may have beneficiary designations that impact your estate plan.
A well-drafted will can reduce stress for loved ones, can disburse assets to loved ones in an orderly manner, establish family trusts and name trustees, minimize administrative fees for your estate, name guardians for minor children, designate who will receive personal items and assets, and make charitable gifts.
A durable power of attorney allows you to appoint someone else (called the attorney-in-fact or agent) to manage financial affairs and assets should you be unable to do so or need help in managing.
A well-drafted durable power of attorney may avoid the need for the appointment of a guardian and/or conservator. A guardian and/or conservator can only be appointed by a court and because it involves a formal judicial proceeding it can be expensive and time consuming.
The “durable” in the durable power of attorney means there is language to the effect that the power is intended to survive the disability, incapacity or incompetency of the grantor and stay in effect until revocation or the principal dies.
A durable power of attorney is only effective during one’s lifetime. Some individuals believe that because they are appointed the agent under a durable power of attorney, they can wait until the principal’s death and handle his or her affairs. This is not true.
There are two basic types of durable powers of attorneys: springing and non-springing.
A springing power of attorney springs into effect only upon the happening of a triggering event.
Most springing powers of attorney designate that event as incapacity. The most common provision is that the agent needs to be in possession of a letter from a licensed physician stating that the principal is unable to manage his or her financial affairs before the durable power of attorney takes effect.
A non-springing power of attorney appoints someone as an agent immediately, there is no condition that needs to be met for the agent to act.
The agent under a power of attorney is under a legal duty to act in the interest of the principal of the power of attorney. This legal duty is called a fiduciary duty and it is a duty of loyalty and conscientiousness that arises out of a special relationship of trust and confidence.
A durable power of attorney needs to be written to carry out your wishes. For example, if you do not want your house sold, the durable power of attorney should not give the agent freedom to sell all real estate. Each durable power should be drafted to fit your situation and carry out your wishes.
A living will, also known as a health care directive, instructs your health care providers as to the type of medical care you do or do not desire should you be unable to communicate such decisions. By drafting a health care directive, you can specify your preferences regarding the extent of life-sustaining measures in case you are no longer capable of making decisions regarding health care.
A health care power of attorney (sometimes called a health care proxy) allows someone else you appoint (your agent) to make medical decisions for you if you are not capable of making such decision.
These deeds are drafted and filed during one’s lifetime and transfer real estate upon one’s death. The principal keeps the right to sell the property or revoke the deed.
Trusts are classified as revocable or irrevocable and living or testamentary.
By establishing a revocable trust, you have the ability to change or terminate the trust. Income during your lifetime is generally paid to you and you are free to sell assets. If all assets you own are placed in the trust, you will avoid probate which can be time-consuming, expensive, and is matter of public record.
An irrevocable trust cannot be modified or terminated without the consent of the beneficiaries.
A living trust is a trust establishing during one’s lifetime. Such a trust is also known as an inter-vivos trust.
A testamentary trust is a trust established at one’s death.
A trust can be extremely useful if the designated beneficiary is not good at handling finances. A trustee can manage assets and creditors can be prevented from having access to assets held in an trust.
A special needs trust is designed to provide for someone who is receiving government benefits or may in the future receive government benefits.
A trust can provide property management for heirs and distribute property with discretion. For example, instead of giving an eighteen year old all of his or her share of assets, the money can be held by a trustee to be used for health, education and support and defer distributions to an age selected by you.
To start with the estate planning process, make a list of assets: bank accounts, real estate, retirement accounts, life insurance policies, etc. Play close attention to how the asset is titled. If you hold property in joint tenancy with a right of survivorship, that provision will trump any provision in a will.
Decide on your beneficiaries. Who do you want to receive your assets? You can make a bequest on a lump sum basis or on a percentage basis. For example, your will can say: I give my son, $50,000.00 or I give my son 20% of my residuary estate.
If you have a minor child or children you will need to decide who should be the guardian for the children. If you are married, discuss with your spouse what traits are essential in a guardian for your child. Consider factors such as age, health, religion, and ideology. You will also need to select a conservator: the person who will be responsible for your children’s assets. Generally the guardian and conservator are one and the same person, but that need not be the case.
Select a personal representative or trustee. The personal representative or trustee will be the person responsible for paying debts and ensuring assets are properly distributed.
Dean Law Office LLC can draft the documents you need to accomplish your estate plan. Call Margaret Dean at 816-753-3100 or email firstname.lastname@example.org.