WHAT ARE THE GOALS OF AN ESTATE PLAN AND WHAT DOES IT CONSIST OF?
WHY DO PEOPLE NEED AN ESTATE PLAN?
There are many reasons why a person needs an Estate Plan. Here are some to consider:
Giving People Direction. An Estate Plan gives other people direction on how you want your affairs to be managed if you are incapacitated or have passed away. Your affairs include your family, your assets, possibly a business, special interests (hobbies), end of life decisions and more. Without an Estate Plan in place, people will have to substitute their judgment for yours.
Creating a Management team. An Estate Plan lets you choose who manages your estate as opposed to a court or possibly battling siblings. It then gives those people direction on how to manage your estate so that they have the authority of your voice when they make decisions for you.
Avoiding Estate Depletion. The failure of having an Estate Plan leaves open the possibility that people who care about your well being or memory will argue about how you should be treated if incapacitated, how your assets should be managed, how your end of life decisions will be made, how your estate should be distributed and more. Such battles deplete your financial estate and frustrates the relationship that you created over your lifetime. It can even lead to a court appointing a professional to manage/administer your estate and that can be expensive. It also allows a professional to review your estate to draft a plan that avoids depletion due to taxes, creditors, elder abuse and more.
Taking Care of People Who Rely Upon You. An Estate Plan should address those who may be reliant on you such as your spouse, minor children, children with disabilities, friends and others. Leaving that decision to the courts and other professionals without an estate plan is not giving them any guidance at all in fulfilling your values and desires.
Addressing Blended Families. Families are often the product of multiple marriages. An Estate Plan allows you to be clear to everyone on what your wishes are and help them by not leaving that decision to those who cannot agree.
Respect To Those Who Step in For You. I like to tell people that managing another person’s estate when that person is either incapacitated or has passed away is like managing a small business on top of your normal life. If somebody has the respect for you to agree to step in to help you during difficult times, then you should have the respect for that person to make sure you give them the tools they need to succeed. A properly drafted Estate Plan can give them those tools.
WHAT ARE THE GOALS OF AN ESTATE PLAN?
Addressing the challenges set forth above are part of the goals of an Estate Plan. Also, when you are completing an Estate Plan, it is good to keep in mind the general goals set forth below. Even a simple Estate Plan should address these general goals.
You want to control your property for as long as possible while you are alive.
You want to take care of your loved ones and yourself if you become disabled.
You want to decide who you should distribute your property to, when they should get it, and in what form (outright or in a trust).
You want to protect your assets from your potential creditors and the creditors of your loved ones.
You want to save every last tax dollar, professional fee, and court cost possible.
WHAT ARE THE TYPICAL ESTATE PLANNING DOCUMENTS?
A typical Estate Planning package should generally include the following:
Will or Revocable Trust.
Community Property Agreement (if married and living in community property state).
Powers of Attorney for Financial Matters.
Powers of Attorney for Health Care Matters.
Healthcare Directive (Living Will).
Settlement of Remains.
Beneficiary Designation discussion.
Additional documents that may be advisable depending on the client’s needs include:
8. Anatomical Gift Statement.
Pre and/or Anti Nuptial Agreements.
Various Trusts such as Spendthrift, Marital, Bypass, Special Needs and more.