What is Estate Planning?
Good estate planning is more than just simply drafting a will. Estate planning also minimizes potential taxes and fees and sets up contingency plans to make sure your wishes regarding health care treatment are followed. On the financial side, a good estate plan coordinates what will happen with your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan), and other property in the event you became disabled or in the event of your death.
Does it make sense to use an estate planning attorney, and is it expensive?
Only an estate planning attorney who regularly practices in the fields of wills, trusts, probate and estate planning is able to provide you with really sound legal advice as you put your estate plan into place. Estate planning attorneys are subject to regulation by state bar organizations, many of which have continuing education requirements and mandatory liability insurance in case the lawyer makes a mistake. When you speak with an estate planning attorney, you can get answers to your questions --including how much it would cost. Often the expense incurred in retaining an estate planning attorney to prepare and help you put an estate plan into place is worth hundreds of times what you and your family would pay with no planning or poor planning. It would also avoid the financial and emotional nightmares that can occur with a poorly drafted (or improper) plan.
When should I start my estate plan?
The only time that you can prepare and implement an estate plan is while you are alive and have legal capacity to enter into a contract. If you are unable to manage your own affairs or suffer from some other disability which affects your legal capacity, your estate plan may be effectively challenged by those who assert that you lacked capacity at the time the documents were created, that you were subjected to fraud, coercion or undue influence during the creation and implementation of your plan.
What about books on estate planning?
As you begin the process caveat emptor (let the buyer beware). There is a lot of information out there; while some of it is very good, some is misleading at best. There are many over-the counter guides to estate planning available at bookstores. Some are pretty decent, most are awful. If you are planning to do it yourself, be prepared to spend a fair amount of time on this project. It is in your best interest to discuss your plans with an experienced estate planning attorney.
Should I have an estate plan?
You should have an estate plan if:
- You are the parent of minor children
- You have property that you care about
- You care about your health care treatment
- If you do not have minor children, do not care about your property, and have no concerns about your health care treatment, then you do not need an estate plan. But if you meet any of these categories above, you should have an estate plan.
What are some typical estate planning documents?
Several of the following documents are typically used as part of the estate planning process:
- A Will, sometimes called a Last Will and Testament, to transfer property you hold in your name to the person(s) and/or organization(s) you want to have it. A Will also typically names someone you select to be your Personal Representative (or Executor) to carry out your instructions and names a Guardian if you have minor children. A Will only becomes effective upon your death, and after it is admitted to probate.
- A Durable Power of Attorney for Health Care or Health Care Proxy appoints a person you designate to make decisions regarding your health care treatment in the event that you are unable to provide informed consent.
- A Living Will or Directive to Physicians is an advance directive that gives doctors and hospitals your instructions regarding the nature and extent of the care you want should you suffer permanent incapacity, such as an irreversible coma.
- A Durable Power of Attorney for Property appoints a person you designate to act for you and handle financial matters should you be unable or perhaps unavailable to do so.
- A Living Trust can be used to hold legal title to and provide a mechanism to manage your property. You can select the person or persons you want -- often even yourself -- as the Trustee(s) to carry out the instructions you want in the Trust and name one or more Successor Trustees to take over if you cannot. Unlike a Will, a Trust usually becomes effective immediately, continues in force during your lifetime even in the event of your incapacity, and continues after your death. Most Trusts are revocable which allows the person who creates the Trust to make future changes, modifications and even to terminate it. (If the Trust is irrevocable, changes, modifications and termination are very difficult (and sometime impossible), although such Trusts often carry some tax benefits.) Trusts also help you avoid or minimize the expenses, delays and publicity of probate.
- A Family Limited Partnership can be used to own and manage your property, in a similar manner to a Trust, but allowing additional tax planning techniques to be employed. Family Limited Partnerships are typically used for those who have large estates and thus have a need for specialized estate planning in order to minimize federal and state estate/death/inheritance taxes as well as provide elements of asset protection.
How can an estate plan prevent a conservatorship proceeding?
An estate plan uses several tools that can prevent the court from gaining jurisdiction over your affairs:
- A Living Will or Directive to Physicians is used to determine if artificial life support systems are to be used or withheld.
- A Durable Power of Attorney for Health Care is used to provide authority to a person, in whom you have the utmost trust and confidence, to make decisions regarding health care treatment when you are unable to provide informed consent.
- A Durable Power of Attorney for Property enables you to authorize a person to act in your place and stead in the event of your incapacity; this attorney-in-fact can manage your financial affairs without the need to have intervention by the courts.
- A Trust or Family Limited Partnership is used to hold property; the Trustees or Partners manage the property held by either of these entities.
- Both the Trust and the Family Limited Partnership continue to manage the property even if you are incapacitated.
Thus, a properly prepared estate plan can enable you to avoid a Conservatorship proceeding over your estate. Compared to the cost of a Conservatorship proceeding, an estate plan can be very attractive.
What is the Attorney's Role?
It is easy to be lured by advertisements claiming you can save time and money by drafting your own will using do-it-yourself software or fill-in-the-blank will kits. However, it is unlikely that these systems will generate a suitable will that accomplishes all your objectives. Only a qualified estate planning attorney, as found on this site, can interpret the maze of laws bearing on property rights, taxes, wills, probate and trusts.
On the other hand, you can save time and money by preparing thoroughly for a meeting with your estate planning attorney. You can organize your information regarding your assets, liabilities, and title arrangements and discuss your feelings about providing for various family members. You should provide copies of important documents such as previous wills or trusts, powers-of-attorney, life insurance policies, employment benefits, and prenuptial agreements or divorce decrees.
Not every state has a program requiring or allowing attorneys to designate a specialty area of practice, so you should inquire about the level of experience and qualifications in estate planning when selecting a lawyer. Membership in certain bar associations or estate planning organizations often indicates a level of dedication to the estate planning field and a commitment to keeping abreast of the law. Most important, you should choose an estate planning attorney in whom you have confidence.
The advice and direction of your Lead Counsel estate planning attorney will be essential to implementing an estate plan that both disposes of your assets according to your wishes and meets your other personal objectives.
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