We often hear of the importance of estate planning. Of course, the first thing that comes to mind when hearing that term is the will that divides property. However, there is much more to estate planning that can pave the way to having some order even as you begin to age. Working with an estate planning attorney can help you decide upon and articulate your plans for these things. The attorney can then help you draft the appropriate documents so your wishes are memorialized for the time when implementing them becomes necessary. Here are some of the components of estate planning with which you should be familiar.
It is incredibly important that a will is in place to divide one’s property after they pass. Otherwise, families will be subject to the probate process which will cause stress, delay and expense. The will may also document your instructions for who is to raise minor children and how they are to be raised. This document needs to be witnessed, signed and notarized while you are still alive in order to be legally binding. Different states may have varying laws as to the legal requirements for a will so getting legal help is a necessity in order to make sure that the will is valid. There are different types of wills so it is necessary to fully understand them before you sign. The estate planning attorney can fully educate as to what may make the most sense for you given your circumstances.
This is largely the beginnings of a will that is done during your lifetime. You start by creating a trust, appointing a trustee and moving property into the trust. You can combine this with some steps that you can take to gain favorable estate tax treatment when the time comes. Once the trust is created and the property is moved into the trust, you no longer own it. The term “revocable” means that you can make changes to this instrument during the course of your lifetime. If you want to make changes to your beneficiaries, you are free to do so. Note that a revocable living trust would not be effective as an asset shelter if you are looking to receive Medicaid benefits for long-term care since the revocable nature of the trust means that you still have some control. This is more effective as the first step towards property distribution.
This is an instrument that appoints an agent to make financial decisions on your behalf. As seniors age, they may not be as equipped to make these decisions in a sound and prudent manner so an agent may be of some assistance in helping to preserve their assets. The power of attorney can go into effect immediately or it can be structured to become effective on the occurrence of a certain event. You have many different options as to how to establish this power and how broad to make it. An estate planning attorney can give you suggestions as to what you may include in this document. Your agent will have control over as many aspects of handling your money as the power allows. This can mean investing your money or even taking steps such as depositing your social security check. In turn, the agent will have a fiduciary responsibility to you to act in your best interests for all financial decisions.
While the power of attorney can be general in nature, it can also be limited to certain areas. One of these areas can involve the ability to direct and make decisions for the medical care of another. This is important if it is difficult for a family to agree collectively on certain choices. As one ages and their faculties decline, they may not be in the best position to make decisions about their own care since it requires an understanding of their condition and the risks that they face. The medical power of attorney can apply in broad circumstances, even if you are not terminally or critically ill.
The law is very stringent about the circumstances under which your health information may be disclosed to third parties. Healthcare providers take strong measures to comply with this statute since they will face consequences otherwise. An individual must consent to the release of their information under nearly all circumstances. The estate plan should provide for your representative to discuss your medical information and history with care providers. This will need to be covered in the form of a release because the providers cannot communicate with a third party without specific permission.
This is an advance care directive that will give instructions in the event that you are critically ill. Some individuals may not want to be put on life support or have resuscitation measures taken if they are necessary. The living will sets forth what your wishes are in this area. If you are in long-term care, this will be incorporated into your care plan. The living will is meant to speak for you when you may not be able to communicate your wishes. While this document can also be referred to as an advance directive, the effect is still the same.
For many people, the details of their funeral are something that they focus on while they are still alive because the service will be the last time that they are publicly remembered. Your wishes for the funeral can be set out ahead of time in a directive to guide people as to what you want for this event. Many people make decisions whether they will wish to be buried or cremated and this can be in the burial directive. Clarifying these decisions ahead of time can spare a family from having to make difficult choices in a short period of time. It is better that they hear from their loved one while they are still able to communicate their wishes.