Estate planning can be a tedious, complex, and a bit overwhelming process. In simple terms, estate planning describes the process in which you make a plan for how you want to divide your property (i.e., your “estate”) after your death. However, estate planning not only involves figuring out where your stuff will go, but also provides who will be in charge of your medical and financial affairs if you are able to do so for yourself. A comprehensive estate plan can include a combination of documents, such as a last will and testament, durable and medical powers of attorney, advanced healthcare directives, living trust documents, and others.
Depending on your needs and those of your loved ones, the combination of documents that make up your estate plan will vary. That being said, there are a few basic concepts to understand and think about as you begin to plan for you and your family’s future.
“Last Will and Testament” vs. “Living Will”
Two key components of an effective estate plan are: (1) a Last Will and Testament, explaining who you’re leaving your assets to and who will be responsible for serving as your executor; and (2) a Living Will (also known as an “advanced healthcare directive” or a “directive to physicians and family”), which details your end-of-life wishes regarding your medical treatment and any life-sustaining treatment you may or may not want to receive in the event that you become incapacitated or otherwise severely injured. While they have similar names, these two documents are very different, and also necessary to include in your estate plan.
Medical and Financial Durable Powers of Attorney (POA)
Power of Attorney documents allow you to name a trusted person to take care of your finances and ensure that your healthcare wishes are honored in the event that you are unable to do so yourself. This relieves your family of the tension, stress, and emotional burden of having to make this decision amongst themselves on who will be the one to make these difficult decisions for you. As you start the process of your own future-needs planning, think about the person you would choose to make such decisions for you, and think about why this person is the best choice for you.
If you have a Last Will and Testament in place when you pass, your chosen Executor will take your Will to court and begin the probate process. “Probate” refers to the legal procedure which recognizes a will and distributes a person’s assets accordingly after they die. The probate process can be very timely and expensive, taking between 6 months and over a year to complete as it requires court appearances, filing accountings, inventories, and appraisements on an annual basis, and other expenses. Fortunately, there is a way to avoid this process: a living trust. A living trust designates a “trustee” and provides detailed directions for the trustee about how to distribute an individual’s assets upon his or her death. Title to those trust assets will pass immediately to your beneficiaries when you die, without them having to go through the complex probate process.
Having an effective estate plan in place can provide you with peace of mind as you think about you and your family’s future. Contact an Estate Planning Attorney today and ensure that you and your family are taken care of.