Is it Important to have an Estate Plan?

Too many people think they don't need an estate plan because they think that only the wealthiest of people have an "estate" worthy of planning for. But that misperception couldn't be farther from the truth! And an estate planning attorney can help you find the right plan for your family. Everyone needs to have an estate plan to ensure that their family can take part in medical care, assets will pass to the whom they want and to protect minor children, as explained in a recent article titled “Estate Planning Considerations That Apply to Nearly Everyone” from mondaq.com. An estate plan does all this, and more. Having an estate plan can also protects privacy; any assets moved into a trust do not become part of the public record.

Here are the documents making up the foundation of an effective estate plan.

Last Will and Testament. This is used to direct the disposition of assets and appoints an executor to handle final affairs after your death. If there is no will, the state law controls how your estate is distributed. Even if you elect to use a revocable living trust, a pour-over will is used to make sure all of your assets flow to the trust. Think of it as an insurance policy that your trust will control the distribution of all of your assets. Perhaps most importantly, in any estate plan the will (or pour-over will) elects guardians for your minor children. For most people with kids this may be the most important aspect of your estate plan. And without naming guardians for your kids you will leave that decision to a court. You've planned so much for your children and their future. Leaving who their guardian would be in your absence is a fundamental part of a parent's planning for their kids.

Revocable Living Trust. Trusts permit more control of the management and disposition of assets in a more private and tax-efficient way during your lifetime and after death. All of your assets are either put in the trust or pointed to the trust at your death. During your lifetime you are the trustee (the person or people who control the trust) and the beneficiary of the trust. You can change it at any time, which is why it is called "revocable". An estate planning attorney can tailor the terms of your trust  to make sure it does exactly what you want for your family in the event of your absence. For example, if you don't want your children to inherit a lump sum inheritance because you may think they are too young to manage that much money at such a young age, your plan can specify that they get access to a portion of their inheritance at a certain age and then the balance of it at a later age. This, too, may help get your children through the earlier phase of adulthood where their financial lives are not quite stable, and ensure that what you leave them isn't wasted.

General Durable Power of Attorney. This document usually names a spouse, adult child or trusted individual who can take over your legal and financial affairs, especially if you should become incapacitated.

Health Care Power of Attorney. Everyone over age 18 should have this document. This nominates a person you choose to make health care decisions. Without it, parents of teenagers and young adults may not be involved in their care. Treating physicians will not be able to discuss your loved one’s care, or you may need to petition the court for guardianship.

Living Will. This document allows you to express your wishes with regard to end-of-life care and medical treatment decisions. It alleviates the emotional burden of guessing what you would have wanted by family members.

HIPAA Authorization. Your medical and health insurance records are protected from being released to third parties without the patient’s consent. While this is helpful for patients seeking to maintain their privacy, it also means parents or loved ones will not have any access to medical records and healthcare providers will not discuss the patient’s medical condition with family members. Fines and penalties for professionals and facilities are strict.

Asset and Beneficiary Designations. Part of an estate plan includes ensuring that assets are in alignment with your wishes. Your will does not control how assets with a beneficiary designation or those with joint ownership titles will be inherited. For your estate to achieve the outcome you want, you’ll need to dig deep into your records and ensure that all assets are properly titled, including insurance policies, investment accounts, retirement accounts, property and any other assets.

An estate planning attorney will design a plan with the right documents for your individual situation. If you have an estate plan in place and have not updated it in recent years, you can contact one of our attorneys to discuss whether you would benefit from an updated plan. Unexpected events are always around the corner and being prepared in advance helps ensure your wishes will be achieved and your family will be protected. If you live in the Madison, WI area give us a call to talk about how we can deliver an estate plan for you that is affordable and will protect your family. We deliver peace of mind. We look forward to helping  you get it.

Reference: mondaq.com (July 29, 2022) “Estate Planning Considerations That Apply to Nearly Everyone”

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