What Are The Basics Of An Estate Plan?
The most important basics of an estate plan are five things.
- A will or what is referred to as a revocable trust or a living trust (which is a substitute for a will). This is the document that says when you die, who you want to receive your property and the terms on which you want them to receive that property.
- A Financial Durable of Attorney. This is the document that appoints the person you want in-charge of your finances if you become mentally incapacitated.
- An Advanced Health Care Directive. An advanced health care directive includes a Living Will which states your desires about end of life health care decisions and a Durable Power of Attorney for Health Care which appoints the persons you want to have legal authority to make health care decisions for you if you are unable to make or communicate those decisions. It also includes an authorization under HIPAA for health care providers to release your medical information to the persons you have named to make medical decisions for you.
- Asset Integration. An estate plan won’t work properly unless the name(s) in which your assets are owned and the beneficiary designations on things like an IRA or 401(k) account or life insurance policy are coordinated with the estate plan. So this is a very important basic for any plan.
- A System to Keep the Plan Up to Date. Over time, you family is going to change, your assets will change, the laws will change, your objectives may change and the world is going to change. So it is important that some process for periodic review is in place so that as these changes occur, your plan can be brought up to date. Otherwise, it may fail to achieve your most important objectives.
What Are Some Key Areas of Life Where a Well-Structured Estate Plan Will Provide Benefits?
There are many important areas in your life where a well-structured estate plan will pay great benefits.
If you have minor children, with good planning you can be in control of who will be appointed as their guardian with the responsibility for their care and custody. You will also be in control of who will be in charge of managing and properly expending the monies you have left for them.
For many people, if their surviving spouse remarries, they have concerns protecting their assets for their children as opposed to somebody else’s children. With good planning, safeguards to take care of this concern can be put in place.
When a death occurs, many times both estate taxes and income taxes come into play. With good planning, the amount that stays in the family in many cases as opposed to going to the IRS and State taxing authorities can be greatly enhanced over that if no planning is done.
With well structured planning, if you become mentally incapacitated during your lifetime, you’re in control of the people who will be in charge of handling your finances and making medical decisions for you. Otherwise, that is all left to chance.
So these are just a few of the many key areas in a person’s life that a well-structured plan can provide great benefits.
Why Is Estate Planning Essential For People Who Are Single?
Estate planning is essential for people who aren’t married for many of the same reasons that it’s essential for people who are. If I am a single person and I become mentally incapacitated, certainly I want to be in control of who will be in control of my financial affairs and who I’m confident will use my resources to take good care of me.
If I am unable to make my own medical decisions, I want documents in place that appoint the people that I want to make those medical decisions for me.
If I am single and I have assets, such as my 401(k) at work, my house, my car, and the cash I have in the bank, I still want to have the say-so about who will receive those assets if I die. If I don’t have a will or other estate planning documents in place, those assets will go to whomever the laws of the State of Missouri say they go to and those may be not be the people or the organizations that I would want to provide for.
How Long Does it Typically take You to Create an Estate Plan from Start to Finish?
We work very efficiently. For the majority of our estate planning clients, generally from the first time we meet with them until everything is signed and fully in effect, the process takes between 30 and 60 days, depending on what people’s schedules are like.
How Often Should People Give Their Estate Plan a Look Over?
There is no set standard for this. But clearly, as changes in circumstances take place in peoples’ lives, if you’ve done your estate plan today and you put it in your top dresser drawer for the next 10 years, 10 years from now, it may not in any way reflect what you want. That’s clearly too long to wait to look at it.
At the very least, once you have done your estate plan, you should establish up front intervals that you would want it reviewed and stick to those intervals. In our office, we have a formal periodic review process for clients to assure that at any particular point in time, our clients’ goals and objectives will be achieved.
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