by Tina Seymour Demoran, Esquire
Last week, I stressed the importance of ensuring you have an estate plan in place, NOW, rather than later.
So, what exactly is an estate plan?
A basic estate plan consists of a Last Will and Testament, a Financial Power of Attorney, a Medical Power of Attorney, and Advance Directives.
Sometimes, your assets or personal life require a Trust, as well. So, without further adieu, let’s cover these items:
A will provides instructions for distributing your assets to your family and other beneficiaries upon your death. Your attorney can customize its provisions to meet your needs. You appoint a personal representative (also known as an “executor”) to pay final expenses and taxes, and then distribute your assets.
If you have minor children, you can designate a guardian for them in your will.
Because a will does not take effect until you die, it cannot provide for management of your assets if you become incapacitated. That’s why it is important to have other estate planning documents, discussed below, that become effective if you should become incapacitated.
*Durable power of attorney
A power of attorney is a legal document in which you name another person to act on your behalf. This person is called your agent or attorney-in-fact.
You can give your appointed agent broad or limited management powers. You should choose this person carefully because he or she will generally be able to sell, invest and spend your assets.
*Health Care power of attorney
A durable power of attorney for health care authorizes someone to make medical decisions for you in the event you are unable to do so yourself.
This document and advance directives (see below) can be invaluable for avoiding family conflicts and possible court intervention if you should become unable to make your own health care decisions.
Advance Directives express your intentions regarding the use of life-sustaining measures in the event of a terminal illness. It expresses what you want but does not give anyone the authority to speak for you. In medical systems, this is also often referred to as a living will.
*Living Trust/Revocable Living Trust
There are many different types of trusts with different purposes, each accomplishing a variety of goals. A revocable living trust is one type of trust often used in an estate plan.
By transferring assets into a revocable trust, you can provide for continued management of your financial affairs during your lifetime (when you’re incapacitated, for example), at your death, and even for generations to come.
Your revocable living trust works reduces the chance that trust assets avoid probate and that personal information will become part of public records.
I cannot stress strongly enough the importance of ensuring that you consult with an experienced estate planning attorney when you decide to get your affairs in order.
Further, I would say that this attorney should also have experience in probate law, as these two fields tie into each other closely.
In other words, the best way to put in place a plan that reduces your chance of your heirs having to probate your estate is to consult with someone who actually practices probate law in your area.