What is an estate plan?

An estate plan is just what the term suggests.  It is a “plan” for how your “estate” will be managed when you are no longer able to do so yourself.  Typically, an estate plan will include:

1) a trust and/or a will, 

2) an advance health care directive, 

3) a financial power of attorney, and 

4) a nomination of guardians for minor children, where applicable.  

Why do I need an estate plan?

A well-designed estate plan will protect you and your loved ones while you are living and after your death. 

During life, an estate plan allows you to choose someone to make healthcare, legal and financial decisions for you during periods of incapacity, and also someone to temporarily care for your minor children while you are ill or otherwise unavailable. 

• Appointment of Agent for Health Care Decisions.  This important document allows you to designate an agent to make health care decisions for you when you can not do so for yourself.  The agent may also be given guidance and authority to make end-of life decisions according to your expressed intentions.

• Appointment of Agent for Financial Affairs. This document allows you to designate an agent to manage your financial affairs during any periods of incapacity.  Examples of such tasks may include managing your banking, mortgage and credit cards accounts, paying your bills and managing your business affairs.

• Appointment of Short-Term Guardian for Minor Children.   This document allows you to appoint a temporary guardian to care for your minor children during your incapacity or absence.

Upon death, a customized plan will ease the administrative and legal burdens often thrust upon family members during a time of turmoil and grief. A carefully designed estate plan will help guide family members in making various financial and funeral decisions, and it will ensure that your loved ones will be cared for in the manner you prescribed, while incurring the least amount of expenses and taxes.   

• Personalized Distribution of Assets.  A well-designed and customized estate plan allows you to determine how your spouse, children, other loved ones or charities will be provided for upon your death.  This can be done through a will, a trust or other appropriate transfer strategies.  Without a personalized estate plan, the government will make those decisions for you.  This is true because when a person dies without an estate plan, the intestacy laws of the state where the decedent resided will determine how and to whom the decedent's assets will be distributed.  Such distributions may, or may not, be consistent with your wishes.  

• Probate Avoidance.  Disposition of assets upon a person’s death is typically administered and supervised by the probate court, unless probate avoidance measures were put in place before death.  Probate proceedings have the disadvantages of not only being costly, but they are open public proceedings that offer no privacy to the decedent and beneficiaries, and they can take months, or longer.  During this time, assets being administered may be unavailable to beneficiaries to satisfy financial burdens.

• Minimize Expenses and Taxes.  The settling of a person’s estate often involves the payment of expenses and taxes.  An estate plan can be designed to anticipate and avoid such costs as much as possible.  Actions you can take during life may include not only the creation of wills and trusts, but also other transfer strategies that can help reduce overall taxes, such as gift, estate, income, capital gains and property taxes.   

• Appointment of Permanent Legal Guardian for Minor Children.   This document allows you to appoint a guardian for your minor children after your death.  Although legal guardianship will ultimately require court approval, this document allows you to express your wishes, which will be strongly considered by the court.