As you read this article, we hope that you and your family are well. The last few weeks have altered all our lives in many ways. After fielding numerous calls from clients and friends with questions regarding estate planning, it is a prudent time to address some common estate planning documents that should be reviewed at this time or prepared to ensure that your plan continues to best meet your needs.
Last Will and Testament
A Will is a legal document that details your last wishes, specifically those regarding the distribution of your possessions and the care of any minors you are responsible for. It can contain a number of different directions, but it generally includes at least the following information:
- An executor, the person responsible for ensuring that all instructions are carried out per the decedent’s wishes.
- A list of beneficiaries, person(s) that will inherit the decedent’s property.
- List all the details of who you want to pass your assets on to. You can choose to leave all of your possessions to your spouse or children. On the other hand, you can opt for a more complicated arrangement, like dividing all of the money in your estate among various relatives. In addition to financial possessions, you should list who you want to leave specific pieces of physical property to.
- Designate guardians for your children if they are minors. This can also be part of a joint will between spouses.
Having a will can make things easier for your family when you die, but it won’t save them from the probate process. This is a court-supervised process that authenticates a person’s will, assesses the individual’s assets and then distributes those assets to the person’s named beneficiaries. To avoid the probate process you would need to establish a Revocable Trust, however, you would likely still need a will.
Conventional wisdom says that only people who are older or wealthy need to create one of these or worry about estate planning in general. However, even people who are young and have modest amounts of assets should have a plan for when they die. This is especially true for people who have children who they want to ensure are properly cared for.
Health Care Proxy / Power of Attorney
We encourage you to review or prepare a Health Care Proxy / Power of Attorney. This document becomes critical in assuring your wishes are carried out by someone you trust if you become incapacitated for any reason. The Health Care Proxy / Power of Attorney explains your health care preferences to your family members and health care providers.
It should be clearly stated within the document the types of treatment you want to receive if you become unable to speak on your behalf. This document is honored by hospitals, doctors and health care providers. Be sure to give your agent a signed copy and discuss your health care wishes. Even after you have signed the form, you retain the right to make all the health care decisions for yourself as long as you are able to do so. Treatment cannot be given to you or stopped if you object and you can revoke your health care proxy at any time.
Your Living Will also referred to as an “Advance Directive,” works in conjunction with your Health Care Proxy / Power of Attorney, and advises your health care agent and/or your medical provider of your wishes concerning medical treatment, artificial life-sustaining measures, and other end-of-life care measures in the event you cannot communicate your wishes yourself.
Durable Power of Attorney
A Durable Power of Attorney is a legal document where a Principal (grantor) appoints an Agent-in-Fact to handle their financial affairs if the Principal is unable to do so. A principal is the individual who gives another person legal authority to act on their behalf.[i] The Power of Attorney is “Durable,” meaning it remains in effect even after the person who has given the power becomes incapacitated. A “Springing” Durable Power of Attorney becomes effective only if and when the principal becomes incapacitated.
The Power of Attorney can be used for all your financial matters, banking, investment management, real estate transactions, and tax planning among other uses.
We recommend that you carefully review all of your beneficiary designations to be sure they reflect your current wishes and coordinate with your estate planning strategy. The most common assets that require a beneficiary designation are employer retirement plans, IRA’s, annuities and life insurance.
Additionally, include contingent beneficiaries in your review, contingent beneficiaries receive the assets if the primary beneficiary predeceases the contingent beneficiary. Lastly, ensure your individually registered bank accounts have named beneficiaries via Payable on Death (POD) or Transfer on Death (TOD) designations depending on the state where you bank.
As uncomfortable as this topic tends to feel, it is important to note that proper planning now while in good health eases the experience for those we care about.
If you would like to discuss any of the above estate planning considerations, please reach out to your Atlas Wealth Management Advisor regarding your unique situation.
J. Christopher Aiello, JD
Director of Trust & Estate Planning
[i] “Power of Attorney.” Legal Information Institute, Legal Information Institute, www.law.cornell.edu/wex/power_of_attorney.