What Does an Effective Estate Plan Include?
In estate planning, an individual or a family arranges to transfer assets and other financial matters in anticipation of death. An effective plan will help to minimize the tax ramifications for the family after death and help alleviate questions or issues with the probate process.
By creating several documents, your last wishes can be specified, and your family can rest easy knowing you have planned ahead for this trying time in their lives. Items such as how assets are transferred, your healthcare wishes, and more can be stipulated.
Last Will and Testament
A will is one of the most common and important documents to create for almost anyone. Essential items such as who will care for your minor children, how your assets will be distributed, who will inherit what, and what will happen to any real estate you own can be included.
Without a will, a lengthy and costly probate process will be necessary and may include unnecessary tax implications for your loved ones.
What is an Advanced Healthcare Directive?
By creating an Advanced Healthcare Directive, you can name a healthcare agent, or a Durable Power of Attorney, that can handle medical decisions on your behalf should you become incapacitated.
An agent should be carefully selected and someone that you trust fully and is aware of your specific wishes. Items like life-sustaining care can be discussed and stipulated, so there are fewer questions when emergency medical decisions are necessary.
What is a Durable Power of Attorney?
Similar to an Advanced Healthcare Directive, a Durable Power of Attorney allows you to name a person who will have the power to make financial decisions on your behalf should you be unable to.
Suppose you are in the hospital and cannot conduct business or financial transactions. A Durable Power of Attorney can ensure your mortgage and other bills are correctly maintained, your investments are cared for, and your real estate is adequately overseen should significant changes need to be made like the sale of property or other decisions.
One of the most important reasons to appoint a Durable Power of Attorney is for convenience and trust. If you have not appointed someone, the courts may appoint someone on your behalf, and this person may not be the trusted resource you would have chosen to handle your financial affairs when you can’t.
Have You Designated Beneficiaries For Your Assets?
Beneficiary designations are essential to help avoid confusion and unnecessary transfer issues upon your death. The beneficiaries can be appointed by you and revised as necessary to ensure your assets are dispersed according to your wishes. This process alleviates stressful conversations and questions amongst your loved ones regarding who may inherit what.
A best practice for most is also to name a secondary beneficiary for assets. Naming secondary beneficiaries alleviates the need to update beneficiary information so often, as a secondary will inherit the asset if the primary beneficiary isn’t available.
Letter of Intent/Instruction
The Letter of Intent or Instruction can help ensure your wish for funeral arrangements, medical care, and more. Though this letter is not a legal document, it can help to communicate to loved ones what your wishes are so they are aware of how you want things to be handled.
What is a Living Trust?
Another critical option that many choose to utilize is a living trust. With an effective trust in place, your family can avoid probate in most cases or at least lessen the timeline or costs that quickly add up with a probate process.
They are typically created by naming yourself as the trustee so you can maintain control of your assets while you are still alive. You can do so if you choose to transfer, sell, or otherwise distribute the assets within the trust while you are still alive. This document is typically referred to as a revocable living trust, meaning you can choose to amend or revoke it at any time.
An irrevocable trust will typically reference the same items, but you cannot revoke it once it has been signed. The common reason to create an irrevocable trust is to help your loved ones avoid unnecessary tax implications. Fewer taxes make irrevocable trusts appealing, but those who wish to maintain control of their assets may not be the best fit.
A living trust can help ensure that your assets are transferred almost immediately to the appropriate parties, usually without consulting an attorney or enduring the probate process.
Why Work With an Estate Attorney?
By being proactive in planning for the inevitable, your family can rest assured important decisions are handled and they don’t have to question significant issues during their time of grief.
While it can be uncomfortable for us to face the idea of our mortality, providing a clear direction for our loved ones through an effective estate plan can be one of the kindest and most thoughtful acts for us to consider.
Several of our clients find peace of mind knowing that they have considered several options for the future and were able to communicate how they wish to proceed. You have worked hard your entire life to care for yourself and provide for your family.
Putting together an estate plan is an extension of this desire to provide for our family, even after we are gone.
Contact our office at (407) 426-7222 to discuss your questions in confidence and put together an effective estate plan that will cover all of the important aspects for you and your family.