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Estate Planning

About Estate Planning
Put simply, estate planning is planning for your own disability and death. If you neglect to make your own decisions regarding the disposition of your assets, control of your assets, and your health care the courts may need to make those decisions for you. In most situations, what the courts do may be significantly different from what you would have wanted. Your estate plan should be designed to accomplish a number of goals and will depend on your particular circumstances. In planning your estate, your goals and wishes, your family and its needs, and the nature and extent of your property are all taken into consideration. Some of the important questions that must be answered during the planning process include:

  1. Who will receive your assets upon your death and will the assets be distributed or held in trust?
  2. Who will administer your estate after your death?
  3. Who will be the guardian of your children?
  4. How your executor or trustee will pay for death taxes if any are due?
  5. How you and your spouse should hold title to assets?
  6. If you cannot care for yourself, who will take care of you?
  7. If you cannot manage financial affairs, who will do so on your behalf?
  8. Who will receive the proceeds of your insurance and/or your retirement benefits?

THE BASICS
A basic estate plan addresses what happens to your property and/or your children when you die. But estate plans can go even further. They can also plan for your incapacitation, such as if you're in an accident or become ill and can no longer take care of your own affairs. Estate plans are not a single document, but a whole collection of documents that you put together to deal with a variety of circumstances.

Last Will and Testament
A last will and testament is the best-known part of an estate plan. A will lets you specify who gets your property when you die. Another key element is that you can use your will to name a guardian for minor children. You also name your executor, the person you want to handle your affairs and oversee the probate process. However, your will does not take effect until you die so most estate plans are more extensive.

Revocable ("Living" ) Trusts
You can also include a trust in your estate plan. When you create a trust, you transfer ownership of your personal assets and real property to it. When you die, the trustee distributes your property according to your directions, just as an executor would do if you bequeathed assets in a will. The greatest difference between wills and trusts is that trust assets don't have to go through the probate process to transfer property to your beneficiaries. Many people include both wills and trusts in their estate plans. A "pour over" will sends to your trust any property you didn't already include. More information on Trusts.

Wills vs. Revocable Living Trusts
A question often arises regarding using a will or a revocable trust as the disposition vehicle of your estate plan. A revocable trust is a will substitute and both can accomplish your estate planning goals, minimize estate taxes, and provide control over your assets upon your death. However, a revocable trust also

  • Avoids probate.
  • Remains private (it does not become public record).
  • Prevents the courts from controlling your assets in the event of incapacity.
  • Prohibits an heir from contesting your wishes.
  • Expedites the execution of your wishes.
  • Eases administration costs and complexity if you own real property in multiple states.

When you create a revocable trust you must transfer ownership of your assets to the trust. Too often a revocable trust is created but the funding is not completed. In that instance, it will be necessary for the assets to go through probate in order to fund and administer the trust.

Powers of Attorney
Estate plans should also address what will happen if you become incapacitated. Most trusts name a successor trustee who will manage the trust if the person who created it can no longer do so. Wills can't do this, however, because they don't take effect until you die. Even the most basic estate plan should include powers of attorney designating a spouse, family member, trusted friend to manage your financial affairs for you if you are incapacitated. There are different types of powers of attorney, limited, durable, springing, etc. Your attorney can discuss the best type for your situation. More information on Powers of Attorney.

Advance Medical Directives (and Living Wills)
Powers of attorney can address not only your financial affairs, but also your health care decisions if you're incapacitated. Your estate plan should also include directives regarding your life and your health. If you are unable to make your own health care decisions, who do you trust to make them for you? An advance medical directive (also referred to as a medical power of attorney) names someone to make those decisions for you. Your advance medical directive should include a living will which explains whether you want your life to be artificially prolonged if there's no chance for your recovery. More information on Medical Directives.


Mclaughlin Law Group Estate Planning Services

 
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