You’ve spent your entire life working hard to accumulate your wealth and assets. Estate planning is the next step to ensuring your assets are protected and your final wishes are recognized upon your death or incapacity.
What is Estate Planning?
Estate planning means drafting a plan in advance and naming whom you want to make decisions for you in the event of incapacity as well as stating who will receive the things you own after you pass away. Estate planning includes deciding how an individual’s assets will be preserved, managed, and distributed after death. Estate planning should also factor any needs that you have as you age such as costs, preferences, and decisions surrounding medical care.
In many cases, estate planning considerations include protecting more vulnerable beneficiaries such as minor children or persons with special needs. It is best to think of estate planning as an ongoing process that can pave the way to an orderly transition as we age and face the everyday uncertainties of life.
Your Estate Planning Documents
A comprehensive Revocable Living Trust Plan will generally include all of the following documents. Below we will explain the purpose of each of these documents as well as important information about each one.
Last Will and Testament
While we often hear of the importance of estate planning, the first thing that might come to mind when hearing that term is a Last Will and Testament. This document states how property should be distributed at death. If you die without a Last Will and Testament the default laws of the state you live in at the time of your passing will govern the distribution of your property. For some, these default laws may reflect their wishes, for many, these laws do not reflect their wishes in which case it is very important to have a proper succession plan in place.
While the Last Will and Testament is an important document most people should have, there are many important issues a Will cannot even begin to address. Only a Probate court can administer a Will which is one reason we recommend many clients use a Revocable Trust instead of a Will to pass their property. Probate is the court process for distributing property at death. All interested parties and creditors are required to be notified and must be given an opportunity to object to the planned distribution of your estate. In many cases probate can be a costly, time consuming, and public process.
Revocable Living Trusts
Most people will benefit from having a Revocable Living Trust in place, either individually or jointly as a couple. Like your Last Will and Testament, a Revocable Trust is also a written declaration of who you would like to receive your property at your passing. However, unlike a Will, a Revocable Trust is a private document which allows you to pass property without the delays, cost, and publicity of going through the probate courts. A Trust can also accomplish a lot more such as protecting your family’s privacy; providing for your children, grandchildren, and pets; helping to plan for your incapacity; and protecting your property from lawsuits. A revocable trust is beneficial for someone who is not concerned about a potential estate tax liability, wants to plan for succession, wants flexibility and control over his or her assets, and wants to protect the beneficiaries’ inheritance from creditors, lawsuits, or other legal threats.
A Revocable Living Trust can be a powerful tool for succession planning and avoiding probate. Asset protection trusts, on the other hand, while they are irrevocable, can still work for succession planning and also provide protections from lawsuits and creditors. At Mile High Estate Planning, we offer multiple asset protection options including domestic and international trusts that make it almost impossible for a plaintiff or creditor to access the trust assets. Asset protection can be an important part of estate planning and making sure your wealth is shielded from potential legal threats.
Planning for Minor Children
If you have children under the age of eighteen, the main priority when thinking about your estate plan is probably who will take care of your children if you became incapacitated or were to pass away unexpectedly. A last will and testament to nominate guardians for your minor children. Without any estate plan in place ahead of time, the courts could end up selecting who looks after your children without being able to take your thoughts into consideration.
While courts often appoint close family members as guardians, they may not necessarily appoint who you would want. In our experience, most parents would like to prevent the courts from interfering with and determining how their children are raised. We believe that no one is better suited to decide how children are raised than their own parents. Having a comprehensive estate plan in place can ensure the right people are called in to care for minor children and your specific wishes and expectations are known and respected.
Protect your Children’s Inheritance with a Trust
Using a revocable living trust for the benefit of your minor children can be incredibly beneficial. A trust can protect your children’s’ inheritance by having a third party managing the funds for them according to your instructions. A trust can be amended over the years as your children grow and your needs change. Assets can be added and removed from the trust, and changes regarding the management, distributions, beneficiaries, can be done as well. A trust can nominate a successor trustee who will be in charge of administering the funds on your behalf in the event of your incapacity or passing, until your children reach a particular age (of your choosing). It is difficult to predict all the possible ways in which a child’s life can change, but a well-drafted trust is able to address even some of the remotest possibilities. Unlike a traditional bequest or gift, a trust can protect a child’s inheritance from unfortunate life events they may experience in the future, such as bankruptcy, lawsuits, or divorce.
Planning for Incapacity
Another important part of your estate plan is your incapacity documents. These documents can help ensure that someone is able to make decisions for you in the event that you are not able to care for yourself, whether permanently or temporarily. When thinking about their estate plan, most people focus on succession planning and many overlook planning for incapacity. This is unfortunate since most people will be incapacitated at some point in their life, not having the proper documents in place can result in a costly conservatorship and guardianship proceeding before the probate court.
A comprehensive estate plan should address your financial and medical decisions in case you are not able to make these decisions for yourself. This is addressed using financial and medical powers of attorney. A power of attorney grants a trusted loved one, of your choice, with the authority to make financial and/or medical decisions on your behalf in the event of incapacity. A financial power of attorney gives permission to a trusted individual to access your accounts in order to pay for the goods and services you and your family may need while you are incapacitated. This means the utility bills, tuition, mortgage, etc. can all be paid even if you are not able to pay these directly. Similarly, a medical power of attorney allows a loved one to make medical decisions on your behalf. This can ensure you receive the medical treatment you would prefer even if you are not able to express your wishes at the time.
As seniors age, they may not be as equipped to make serious financial decisions in a sound and prudent manner so an agent may be needed in helping them preserve their assets. The power of attorney can go into effect immediately or it can be structured to become effective later based on the advice of medical professionals. The appointed agent will have control over as many aspects of handling financial matters as the power allows. This can mean investing money or even taking steps such as depositing social security checks. In turn, the agent will have a fiduciary responsibility to act in the 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 there is not a terminal or critical illness.
Finally, an Authorization for Release of Protected Health Information, also known as a HIPAA release, allows medical professionals to share your protected medical information with your family. This means your family can get prompt access to your medical records in case a medical emergency were to occur.
Family Guidance Letter
Attorneys at Mile High Estate Planning created the Family Guidance Letter to enhance your estate plan. The forms and letters in the Family Guidance Letter serve to convey your final wishes to your personal representative, trustee, guardians, and heirs. The Family Guidance Letter also includes instructions for funding your trust and creating a certificate of trust. You may include instructions regarding your online profiles and accounts, who will care for your pet(s) as well as any special instructions regarding their care. The Family Guidance Letter can be updated as often as necessary at absolutely no cost.
Why Mile High Estate Planning?
No matter your age or life stage, it is never too early to make your wishes known and put a plan in place for your family’s future. Working with an experienced estate planning attorney can help you be better informed about the consequences of these important decisions as well as help you form and articulate your plans for many of these eventualities.
A trained and competent attorney can then help you draft the appropriate documents to ensure your wishes are memorialized for the time when implementing them becomes necessary. At Mile High Estate Planning, we have worked with numerous clients over the years to find estate planning solutions that fit their needs.
If you have any questions or if you would like to discuss the benefits of an estate plan, please call or email us today. We are always happy to meet for a no-obligation consultation at no cost to you. As your estate planning attorneys, we will walk you through the process; explain available options and answering questions until we determine the right path forward together.