Planning for you and your family’s future is one of the most important reasons to hire an estate planning attorney. Without estate planning documents, your life’s work is divided according to a scheme created by legislators in your state. Depending on the current state of the law, it may even be subject to a tax before it can be distributed to your family.
Rather than leaving your family with the myriad of regulations and filings required by your local court, I will work with you to create a comprehensive estate plan, so you will have the peace of mind that comes with knowing your estate is protected and your family is cared for. I work with clients throughout the spectrum of estate planning issues, from new families who’ve never created a plan before to families ready to revise their old documents to reflect their current realities. No matter where you fall on the spectrum, we’ll review your options in a way that is understandable to you and that achieves your goals for your legacy.
If you don’t understand all of your estate plan documents, I won’t let you sign them.
Core Estate Plan Documents
When you hear the terms “estate plan” or “estate planning” it can be confusing to figure out what exactly is included. If you are buying a mail-merged “plan” from an online website, all you are getting is your information filled in to every available form they have and then you’ve got to figure out which documents you need or don’t need. When you are creating an estate plan, there are three documents that I think need to be in everyone’s portfolio and I refer to them as “Core Estate Plan” documents for my clients: Wills, Healthcare Power of Attorney, HIPAA Authorization.
A will, sometimes called a Last Will and Testament, is the central document in everyone’s estate plan. When you die, the local probate court will ask a simple question: Did the person die with a will? If they did, then the court will need the original will for their files (usually along with a death certificate). Quick Note: When you die without a will, the legal term is “intestate” and then the court has a separate process to determine what your estate is worth and who should receive it.
Even though it’s a very important document, a will does not need to be long and complicated. I’ve seen wills that are only 2 pages in length. As long as it meets the formality requirements of your state, your will can be any length you would like it to be. Even though it can be short, most of my clients prefer a more in-depth document, addressing a variety of areas like,
- Division of Personal Property
- Division of their Assets
- Appointing a Person to Divide the Assets
- Guardians for their Children
- Trustees for their Children
- Gifts for Charities and Other Institutions
- Opting for Informal Probate
- Choosing to be Cremated or Buried
While your will may be long or short, no matter the length, it’s important that you understand what it says and that it reflects your wishes. It’s one of the most common objections I hear when clients come to me after they previously had a will drafted by someone else: I signed it, but I’m not sure exactly what it says. Please don’t fall into this trap! Your will is an important document and you need to understand what it says.
Healthcare Power of Attorney
While a will controls what happens to your assets after you are deceased, while you are living, there are other important documents for you to include in your estate plan. One of the most crucial documents that everyone needs is a Healthcare Power of Attorney.
The purpose of a Healthcare Power of Attorney is to designate who can make medical decisions for you if you become incapacitated or are otherwise unable to speak for yourself. It provides your doctors with a person they can turn to so that these important decisions can be made in a manner that you are comfortable with.
Along with simply designating a person to act on your behalf, it also provides guidance for your healthcare agent on issues like,
- Placing you in longterm or hospice care
- Keeping you in your home if you are sick
- Hiring healthcare aides to assist you
- Administration of Pain medication
- Admission to a psychiatric facility
- Organ donation after you’ve passed away
- Authorizing an autopsy
If your healthcare agent incurs expenses while assisting you, your Healthcare Power of Attorney can also provide that they get reimbursed.
A less common document in traditional estate plans, you may also want to have a HIPAA Authorization in your set of documents. Just like the authorization you sign each time you go to the doctor’s office, this allows for certain people to have access to your medical records.
Especially if you have a healthcare agent who is trying to make a medical decision for you, you want to make sure they have access to all of the available information. A HIPAA Authorization will provide them with the ability to access your medical records in case you are incapacitated.
These core documents don't need to be complicated or expensive and you will probably be surprised how easy it is to get these in place quickly if you don't have them. If you know it's time to get your estate plan started, or if you have more questions and want to discuss your options further, let's set up a Legal Strategy Session to discuss the next steps for you.
Children and Your Estate Plan
The most important reason to have an estate plan is if you have children who are under the age of 18. If you don’t have an estate plan and something happens to you, your loved ones are left without guidance on what should happen to your children. Often, in order to simply be able to enroll your children in school or get their affairs sorted out financially, your family will need to go to court to get a judge’s permission. Most people don’t want these types of decisions to be left up to a politically appointed local judge who’s never met your children and has no idea who would be the appropriate person to look after your children.
The short-term way to make sure you have a plan for your children is to have a temporary or standby guardian appointed in case you are incapacitated or otherwise unable to care for your children. This isn't the final way to create a plan, but will at least make sure that the right people are taking care of your children in case of emergency or until your will can be effectuated.
In your estate plan documents, there are two main roles that need to be filled when your children are under the age of 18:
The guardian of your children is the person who will take care of the children on a day-to-day basis. Your kids will likely move in with them and become a part of their household and be raised by them in their family. If you’ve got brothers and sisters, or cousins or other family members who would be a great fit to raise your children, this is the place to appoint them. Otherwise, your children could be sent to live with your brother-in-law who’s never had children and lives in a studio apartment because he’s the closest relative your kids have.
The trustee for your children has a bit of a different role to play. Their job is to manage the money for your children that they inherit from your estate. Normally, you’ll have a trust set up in your estate plan for your children as part of your will. That trust will only come into being if you die when the children are underage. The trustee will be the person who manages the trust and the money in it and can make distributions of assets to the kids if they need it for things like education or getting married or other large life events.
One common misconception that you may have is that the guardian and trustee need to be the same person. They do not need to be the same person and, often, the same person is not the best fit for both roles for your children. If you have one sibling who is great with money but doesn’t like kids and another sibling who loves children, then you can hopefully see a natural way that you can divide up these roles.
If you have children and don't yet have an estate plan in place, even a temporary guardianship designation can at least give you a bit of peace of mind while you prepare the rest of your documents. Let's set up a Legal Strategy Session to get a plan in place for your children in the short-term and the long term.
Additional Factors to Consider
Once you’ve got the basics covered, it’s time to think about your specific estate planning needs. This might include:
- Providing for family members with special needs. If you have a spouse, child, grandchild, or other loved one with a physical or mental disability, simply gifting money outright can jeopardize their claim to valuable government benefits. I can help you create a trust that will provide for your special needs loved one in the most effective way.
- Giving back. Many of my clients are passionate about helping others. If you’re interested in supporting a charitable cause as part of your legacy, we can discuss how the various options will affect your overall tax liability.
Estate Planning for Business Owners
Business owners often spend a lot of time working in and around their business. They take a deep dive into their industry, working hard and almost exclusively focus on their business. For those who don’t have them already, the business becomes like a child. Just as you need to protect your children with an estate plan, you also need to make sure your business is protected.
If you are a business owner, you want to make sure that your business and its operations and functions have a place in your estate plan. More than just a simple will, you want to have the right documents in place so that the right person is able to step in and run the business if you become incapacitated (the most common way to do this is through a power of attorney). This is a separate document from your healthcare power of attorney, which will appoint someone to make health decisions for you if you are unable to do so.
Your business hopefully has an operating agreement and has provisions that will say what happens if you retire or are no longer able to run the business. While this functions as a plan for the business, you’ll want to make sure your personal affairs are in order too with a properly thought out estate plan.
Estate planning for business owners is an important part of your business planning as well. If you’re running a business and haven’t had the time to create an estate plan, let’s set up a Legal Strategy Session to get things going and discuss the best options for you and your business.
The Ongoing Estate Planning Process
Once you’ve signed your documents, that doesn’t mean the process stops there. In fact, once you’ve signed the documents, it’s a good chance to examine other parts of your plan, like
- Cryptocurrency inventory
- Beneficiary Designations on Retirement Accounts
- Life Insurance Policies
- Real estate deeds that may need to be updated
- Temporary Guardianship Designations
- Meeting with your financial advisor
Usually, it’s a good idea to have your estate plan documents reviewed by an attorney every 2 – 3 years. Life can change quickly, but sometimes the changes are small, but begin to add up over a couple of years. Even if it’s just a couple of small changes, some people think this means re-drafting the entire plans, but most of the time, it’s nothing more than a review and possibly an amendment or two to the structure of your plan.
But as time goes on, you’ll find there can be changes in your life. Especially if there are major life changes (marriage, divorce, children, death), you’ll want to make sure that your estate plan keeps up with your family. These major changes can be stressful and can make life very busy, but it’s important to carve out some time to make sure your estate plan is reviewed. It only takes a meeting with your attorney, but it can save your family a lifetime of headaches from having to deal with an out-of-date estate plan.
There’s also another wrinkle to the entire process, one that none of us controls, and that is changes to the laws, either from the federal government or your local state government. When you sign your plan, it could be the best-designed plan for that current set of laws. But a few years later, the government is now controlled by a different political party and your plan could leave your legacy in jeopardy to a whole new legal structure. If you’re not sure what the current state of the law is, it’s a good time to set up a review with an attorney to make sure your legacy is protected.
If you’re not sure if it’s time to have your estate plan reviewed, there’s a quick survey that you can take to see whether it’s time or not.