Whether there really is little time for doing more, or just a lack of focusing on one’s needs, I often hear from clients they just don’t have time to do their estate planning. Even after starting the process, they often get “busy” and put it on the back-burner. In addition to not wanting to think about their own death, part of the reason for not moving forward is that most people don’t know what estate planning is, or why it’s so important. While there are many different alternatives, there are three or four key documents everyone should have … a “Core Estate Plan.” The documents include: a Will, a Power of Attorney for Property, a Power of Attorney for Healthcare and, if you own real estate (including your home), a revocable “living” trust.
Will – a Will is a fairly simple document. It lets you determine who will receive your assets after your death, and when, and who will be in charge of administering your Estate (the “Executor”). Other provisions may name a Guardian to take care of your children and simplify the probate process by directing that the Estate should be administered independently. (A “supervised administration” requires Court approval to take various actions, which usually results in thousands of dollars of additional expense). A Will can waive the requirement for a surety bond which is normally required by the Court. Just waiving the requirement in a Will may avoid hundreds, if not thousands, of dollars of expense.
Power of Attorney for Property – A Power of Attorney (“POA”) for Property lets you designate an agent to handle your financial affairs in the event you become unable to do so or in the event you prefer to let someone else handle certain financial transactions. Many people believe their spouse will be able to handle things but unless the spouse is named to act in the documentation for the asset, most times, the spouse will have no legal authority to act.
Power of Attorney for Healthcare – A POA for Healthcare lets you designate an agent to make medical decisions for you in the event you are unable to do so. It also lets you state your desires regarding issues like organ donation, burial/cremation, and to what extent you want medical treatments if you are in a vegetative or terminal state.
Revocable “Living” Trust – If a person owns real estate or other significant assets, I almost always recommend the person create a living trust. That person (the “Grantor”) will be the trustee of the trust and can change it at any time. The trust document acts like a Will by naming who will be the trustee in the event the Grantor cannot act (due to death or disability). It will also determine who will receive the assets and when. With a living trust, the trust should be “funded” by naming the trust as the owner or beneficiary of the Grantor’s assets. With a properly funded living trust, the probate process can be avoided entirely (eliminating court costs, publication fees, surety bonds, and a great deal of the legal fees)