When most people think about estate planning, they think it is only about how to pass your property on after your death to the recipients of your estate with minimum fuss, expense, and taxes. But it’s about a lot more as well.
Estate planning is an opportunity to make your wishes known. Estate planning provides for administration and protection of assets during your lifetime and for decision making in the event of a disabling event or illness. You are able to state your preferences concerning the type of care you receive and who you wish to act as your agent in carrying out those wishes. While none of us like to think about dying, estate planning is something we all must do. At our firm, we have seen negative results such as family conflict and unintended beneficiaries, when people have failed to plan or their estate plan has not been properly done.
We have also seen cases of being penny wise and pound foolish with do it yourself (“DIY”) estate planning. The effort to avoid attorney’s fees often means greater attorney’s fees having to be paid by the heirs as they fight over assets or pay to clear up a problem. It’s a lot cheaper to execute a high-quality estate plan than to clean up the mess left by no estate plan or one that’s poorly thought out.
To properly plan, a comprehensive estate plan should include:
- A Last Will and Testament
- A Durable Power of Attorney
- A Living Will or Advance Directive
- A Durable Healthcare Proxy
- A Trust (if appropriate)
Why Should I Create a Last Will and Testament?
When you die without a will, the laws of intestacy govern who receives your assets and you lose the advantage of deciding who gets what part of your estate assets. For example, in New York, if a spouse and children survive you without a will, the spouse will receive the first $50,000 plus half of the remainder of your assets. Your children will divide the remaining half. If you are single, your estate may go to your children, parents, or siblings. If you have absolutely no living relatives, then your estate will go to the state. This is probably not what you want to happen to your assets. However, you may want to make a charitable donation with some of your assets or put money in trust for your children. Not having a will may also mean that your minor children might be under the control of a court-appointed guardian and not the person you want.
Also, without a will, you don’t have the option of naming an executor, trustee, or other beneficiaries. Creating a will avoids problems that may arise from intestacy laws.
What is a Durable Power of Attorney?
A Power of Attorney is a legal document that allows you (the principal) to appoint someone else (an agent) to make legal decisions and transactions on your behalf. As the principal, you determine what decisions and transactions can be made on your behalf. A Durable Power of Attorney allows your agent to make decisions on your behalf, even if you later suffer a disability. By signing a durable power of attorney, you have not given up your power to do any of the same functions as your agent, but you have granted legal authority to this person to perform various tasks on your behalf.
Some key benefits of having a comprehensive durable power of attorney, include:
- It provides the ability to choose who will make decisions for you (rather than a court).
Without an effective Power of Attorney, your family may be forced to commence a guardianship proceeding and ask a court to appoint someone on your behalf, in the event you become incapacitated. A guardianship proceeding is time-consuming and costly. However, having a power of attorney, will save you and your family the time and expense in the event you are unavailable or unable to act. - Provides peace of mind for everyone involved.
Taking the time to sign a power of attorney lessens the burden on your family members who would otherwise have to go to court to get the authority to perform basic tasks, like writing a check or arranging for home health services. Knowing this has been taken care of in advance is of great comfort to families. - Prevents delays in asset protection planning.
A comprehensive power of attorney should include all of the powers required to do effective asset protection planning. If the power of attorney does not include a specific power, it can greatly dampen your agent’s ability to complete the planning and could result in thousands of dollars lost. While some powers of attorney seem long, it is necessary to include all of the powers necessary to carry out proper planning.
What is a Living Will?
The primary purpose of a Living Will is for you to set forth your own wishes as to what medical procedures or treatment you do or do not want in the event you are incapable of communicating your own wishes or decisions due to a terminal illness or persistent vegetative state. In your Living Will, you can also specify how your remains should be handled. A Living Will can serve an important role to provide clear evidence of your wishes and provide you with a peace of mind that comes with knowing that under unfortunate circumstances your family will not be needlessly burdened.
What is a Health Care Proxy?
A Health Care Proxy is a legal document that allows you to appoint someone (an agent) to make health care decisions for you (the principal) in the event you become incapacitated. This power can be used not only when you are in a life-threatening condition, but also when you are incapable of making a health care decision. A proper Health Care Proxy allows you to maintain control over your future in terms of medical treatment by placing important decisions in the hands of the agent. The effect is similar to the Power of Attorney, in that the Health Care Proxy affords you security and peace of mind.
What is a Trust and it is Appropriate for Me?
A trust can also be a key part of your estate plan. To learn more about trusts, click here.
Your estate plan can be an ideal means to leave a positive legacy. If you or someone you know are ready to create your estate plan or would like to have a “check-up” of your existing estate plan, schedule a strategy planning session with the Samuels Law Firm. We would be happy to work with you.